Background and Context
On Friday, oil prices increased following a drone attack by Ukraine on a Russian port and refinery in Novorossiysk, a strategic Black Sea port handling Russian oil shipments and Kazakhstan’s oil exports. The attack has contributed to the rise in crude prices, according to analysts from DNB.
Impact on Oil Prices
The Brent crude oil benchmark for January delivery rose by 2.19% to $64.39 per barrel, while West Texas Intermediate (WTI) for December delivery increased by 2.39% to $60.09 per barrel, as reported by AFP.
“The main event in the market today is the Ukrainian attack in Novorossiysk,” said Robert Yawger of Mizuho USA. “During the night, a petroleum refinery was damaged due to the attack,” according to local authorities.
Novorossiysk is a crucial Black Sea port, managing Russian oil shipments and Kazakhstan’s oil exports. The attack has led to an increase in crude prices, as per DNB analysts.
Yawger, however, downplayed the impact of these attacks on Russian crude supply, instead viewing them as an opportunity for speculators to bet on rising prices.
OPEC and IEA Projections
The Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) released their monthly market reports on oil this week, on Wednesday and Thursday respectively. Both organizations forecast that production will exceed demand not only in the current year but also in 2026.
These projections, initially announced by OPEC, caused oil prices to fall on Wednesday. Barbara Lambrecht of Commerzbank stated, “Although we predict a continued decline in prices due to concerns over excess supply, prices could rebound next week due to increased risk exposure.”
Key Questions and Answers
- What happened? Ukraine carried out a drone attack on a Russian port and refinery in Novorossiysk, a strategic Black Sea port.
- How did this affect oil prices? The attack led to a rise in oil prices, with Brent crude increasing by 2.19% and WTI rising by 2.39%.
- Who are OPEC and IEA? The Organization of the Petroleum Exporting Countries (OPEC) and the International Energy Agency (IEA) are international intergovernmental organizations that monitor and provide information about global energy developments.
- What do OPEC and IEA project for oil supply and demand? Both organizations predict that oil production will surpass demand in the current year and also in 2026.
- How did their projections impact oil prices? The initial announcement of these projections by OPEC caused a drop in oil prices on Wednesday.
