Oil Prices Climb Amid Supply Constraints and Geopolitical Strains

Oil prices are witnessing an uptrend for the second consecutive day, influenced by the anticipation of a tighter supply landscape. This surge is attributed to reduced Russian oil production and ongoing assaults on Russian refineries. Brent crude experienced a modest increase, reaching $86.98 per barrel, while U.S. crude futures ascended to $82.23 per barrel.

The backdrop of these price movements includes Russia’s adherence to OPEC’s production target, cutting back to 9 million barrels per day, down from 9.5 million. Concurrently, disruptions in Russian refinery operations due to attacks, notably the partial shutdown of the Kuibyshev refinery, have exacerbated supply concerns.

Analysts, including those from ANZ, point to these supply-side issues and persistent tensions in the Middle East as primary drivers of the current oil market dynamics. Furthermore, projections by Macquarie anticipate an increase in U.S. refinery crude runs, coupled with a reduction in domestic supply, signaling tighter market conditions ahead.

These developments occur amid broader geopolitical tensions, including conflicts affecting key shipping routes and international diplomatic relations, which continue to inject volatility into global oil markets.