Oil prices experienced a 1% increase on Monday, driven by worries about fuel supply disruptions. This surge came after a missile struck a fuel tanker operated by Trafigura in the Red Sea. Additionally, concerns rose over a potential decrease in Russian refined products exports due to multiple refineries undergoing repairs following drone attacks.
Brent Crude and West Texas Intermediate (WTI) See Gains
Brent crude futures saw a rise of 83 cents, reaching $84.38 per barrel, with a session-high of $84.80. Concurrently, U.S. West Texas Intermediate crude climbed by 78 cents, reaching $78.79 per barrel.
Trafigura Assesses Security Risks After Red Sea Incident
Trafigura, a commodities trader, announced on Saturday that it was evaluating the security risks associated with further voyages in the Red Sea. This followed an attack by Yemen’s Houthi group on an oil tanker operated by Trafigura, resulting in a blaze that was extinguished by firefighters.
Supply Disruptions Trigger Market Response
ANZ analysts noted a shift in the market sentiment, stating, “Disruptions to supply have been limited, but that changed on Friday after an oil tanker operating on behalf of Trafigura was hit by a missile off the coast of Yemen.” The threat to oil tankers linked to the U.S. and UK raised concerns, prompting the market to reconsider the risk of disruptions.
Russia Faces Reduction in Naphtha Exports
In response to fires disrupting operations at refineries on the Baltic and Black Seas, Russia is expected to cut exports of naphtha, a petrochemical feedstock, by approximately 127,500 – 136,000 barrels per day. This amounts to about a third of Russia’s total exports, impacting the global supply chain.
OPEC+ Meeting on the Horizon
On February 1, leading ministers from the Organization of the Petroleum Exporting Countries (OPEC) and its allies, collectively known as OPEC+, are scheduled to meet online. Discussions are anticipated to focus on potential oil production adjustments for April and beyond. However, sources suggest that decisions on further output policy may be deferred, given the early timing of the meeting.
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