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Oil prices rise more than 1% on the possibility of Russian supply disruptions
Oil prices rose more than 1% during trading on Tuesday, September 16, as markets assessed the potential disruption to Russian crude supplies due to Ukrainian drone attacks on several Russian ports and refineries, and the possibility of an interest rate cut at this week's US Federal Reserve meeting.
Brent crude futures rose $1.03, or 1.53%, to settle at $68.47 a barrel.
This comes after three oil industry sources told Reuters on Tuesday that Transneft, Russia's oil pipeline monopoly, warned crude producers of the possibility of cutting production following Kyiv's drone attacks targeting vital export ports and refineries in Russia.
JPMorgan analysts commented on these developments, saying, "An attack on an export terminal like Primorsk (Russia) is more aimed at limiting Russia's ability to sell its oil abroad, impacting export markets."
The American bank's analysts added, "More importantly, the attack indicates a growing willingness to disrupt international oil markets, which could further pressure oil prices."
According to estimates from Goldman Sachs, Ukrainian attacks shut down approximately 300,000 barrels per day of refining capacity in Russia during August and September.
For his part, US Treasury Secretary Scott Besant said on Monday that the US administration will not impose additional tariffs on imports from China to encourage the Asian country to halt its imports of Russian oil.
In another context, traders are awaiting the US Federal Reserve's meeting on Tuesday and Wednesday, amid expectations of a cut in interest rates, which could boost economic activity and fuel demand.
For its part, the International Energy Agency reported on Tuesday that the natural rate of decline in global oil and gas field production is accelerating, due to increased reliance on shale and deep-sea resources.
This indicates that companies will have to increase investment just to maintain stable production levels.
