Oil prices rose on Monday after Russia-Ukraine tensions intensified over the weekend. Still, concerns about fuel demand in China, the world’s second-largest consumer, and forecasts of a global oil glut weighing on markets.
Brent crude futures rose 18 cents, or 0.3%, to $71.22 a barrel by 0713 GMT, while WTI crude futures rose 6 cents, or 0.1%, to $67.08 a barrel.
Russia launched its biggest airstrike on Ukraine in nearly three months on Sunday, severely damaging the country’s power system.
President Joe Biden’s administration has allowed Ukraine to use U.S.-made weapons to strike deep inside Russia. There has been no immediate response from the Kremlin, but the easing of restrictions on Ukraine’s use of U.S. weapons is a serious escalation.
Biden’s decision to allow Ukraine to attack Russian forces around Kursk with long-range missiles could have a geopolitical impact on oil, as tensions there escalate in response to North Korean troops entering the conflict.
The conflict has had little impact on Russian oil exports so far, but if Ukraine targets more oil infrastructure, oil markets could rise even higher.
At least three refineries in Russia have been forced to stop processing or cut production, suffering heavy losses due to export restrictions, rising crude prices, and higher borrowing costs.
Brent and WTI fell more than 3% last week after weak data from China and the International Energy Agency (IEA) forecast that global oil supplies will exceed demand by more than 1 million barrels a day in 2025, even if cuts from OPEC+ continue.
According to government data, China’s refinery output fell 4.6% in October from a year earlier, and the country’s factory output growth slowed last month.
Investors are also concerned about the pace and scope of the U.S. Federal Reserve’s interest rate cuts, which have created uncertainty in global financial markets.
The number of oil rigs operating in the U.S. fell by one last week to 478, the lowest since the week of July 19, according to Baker Hughes data.
