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In the oil market, the upward trend continues at the beginning of the new week, with prices rising to nearly 5-month highs due to increasing geopolitical risks related to supply disruptions. This surge is driven by a series of Ukrainian drone attacks on Russian refineries, reported by Reuters.
As of 11:00 AM Bulgarian time, Brent crude oil futures reached over $86 per barrel, while futures for U.S. West Texas Intermediate (WTI) crude approached the $82 per barrel mark. These prices mark the highest levels since November 2023.
Today's strengthening follows last week's increase of nearly 4%, which was a result of heightened concerns about supply disruptions following the series of Ukrainian drone attacks on Russian refineries and the risks of further strikes on Russian energy infrastructure.
“The strikes on Russian refineries added $2 to $3 per barrel to the so-called risk premium for crude oil last week, and that increase remains in place as we start this week following additional Ukrainian drone attacks over the weekend", stated Vandana Hari, founder of oil market analysis provider Vanda Insights.
On Saturday, a single strike ignited a brief blaze at the Slovyansk refinery in Krasnodar, which handles approximately 170,000 barrels of crude oil daily. According to a Reuters analysis, these attacks have caused around 7% of Russia's refining capacity to remain inactive during the first quarter. These refining facilities process and export various types of crude oil to multiple markets, including China and India.
The primary focus this week centers on potential shifts in monetary policy across major economies. Many central banks have maintained high-interest rates over an extended period to combat persistent inflation. Tony Sycamore, a market analyst with IG, highlighted the significance of the U.S. Federal Reserve's upcoming two-day meeting, concluding on Wednesday, which is expected to offer clarity regarding the timing of interest rate adjustments.
Sycamore predicts that the Fed will likely keep rates unchanged this month. However, he suggests that the possibility of an interest rate cut at the June meeting is now uncertain. Lowering interest rates could stimulate demand in the United States, the world's largest oil consumer, thereby bolstering oil prices.
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