Oil prices extended gains on Monday as investors assessed the impact of Ukrainian drone attacks on Russian refineries that could disrupt its crude and fuel exports, while also eyeing U.S. fuel-demand growth.
Brent crude futures rose 36 cents, or 0.5%, to $67.35 a barrel by 0632 GMT while U.S. West Texas Intermediate crude was at $63.05 a barrel, up 36 cents, or 0.6%.
Both contracts gained more than 1% last week as Ukraine stepped up attacks on Russian oil infrastructure, including the largest oil exporting terminal Primorsk and the Kirishinefteorgsintez refinery, one of the two largest refineries in Russia.
“The attack suggests a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil prices,” JPMorgan analysts led by Natasha Kaneva said in a note, referring to the attack on Primorsk.
Primorsk has a capacity to load about 1 million barrels per day (bpd) of crude, making it a key export hub for Russian oil and the largest port in western Russia.
The Kirishi refinery, operated by Surgutneftegaz, processes about 17.7 million metric tons per year, or 355,000 bpd, of Russian crude, equal to 6.4% of the country’s total.
“If we are seeing a strategic shift by Ukraine towards Russian oil exporting infrastructure – that brings upside risks to forecasts,” IG markets analyst Tony Sycamore said, despite ongoing concerns around oversupply as OPEC+ plans to ramp up output.
An oil company in Russia’s Bashkortostan region will maintain production levels despite a drone attack on Saturday, regional governor Radiy Khabirov said.
Pressure is mounting on Russia as U.S. President Donald Trump reiterated on Sunday that he is willing to impose sanctions on Russia but Europe has to act in a way that is commensurate with the United States.
Investors are also watching U.S.-China trade talks in Madrid that started on Sunday amid Washington’s demands that its allies place tariffs on imports from China over its purchases of Russian oil.
Last week, softer job-creation data and rising inflation in the U.S. raised concerns about economic growth in the world’s largest economy and oil consumer even as the Federal Reserve is likely to cut interest rates during its September 16-17 meeting.
(Reporting by Florence Tan; Editing by Muralikumar Anantharaman and Christian Schmollinger)