Oil holds gains as Black Sea attack puts Russian flows at risk

Oil held gains after Ukraine attacked another Russian vessel over the weekend, putting at risk significant flows of the nation’s commodities from the Black Sea such as crude and grains.

West Texas Intermediate futures traded near $83 a barrel at the start of the week after rising more than 4% over the previous two sessions. On Saturday, a sea drone hit a Russian-flagged oil tanker that supplies fuel to Moscow’s forces in Syria. That followed an attack on a naval vessel on Friday.

The hostilities could threaten Russia’s commodity exports via the Black Sea, a route that accounts for 15% to 20% of the oil that the OPEC+ producer sells daily on global markets and most of the nation’s grain. Wheat advanced.

“The Ukrainian naval drone attack on a Russian tanker over the weekend does make for some unease in a market already dealing with tightening supply,” said Vandana Hari, founder of Vanda Insights in Singapore. Easing concerns over a possible US recession have added to recent price gains, she added.

Oil capped a sixth weekly gain last week, the longest rising streak since June 2022. Futures have erased year-to-date losses following supply cuts from Saudi Arabia and Russia, leading to a tightening of the market. On Saturday, the kingdom raised nearly all of its prices for September to Asia and Europe.

Poland has also stopped shipping oil through part of the western section of the Druzhba pipeline that sends crude to Germany after a leak was detected late Saturday, according to PERN. The Polish pipeline operator plans to resume pumping on Tuesday morning.

Prices:
WTI for September delivery was little changed at $82.73 a barrel at 12:10 p.m. in Singapore. Brent for October settlement was steady at $86.14 a barrel.