Oil Prices Rise on Ukraine Conflict and Fed Easing Hopes
Oil prices climbed on Tuesday as worries about supply disruptions grew amid the ongoing war between Russia and Ukraine. At the same time, traders focused on upcoming U.S. jobs data that could shape the Federal Reserve’s next move on interest rates.
Brent crude rose 37 cents, or 0.54%, to $68.52 a barrel by 06:17 GMT. U.S. West Texas Intermediate (WTI) gained $1.01, or 1.58%, to reach $65.02 a barrel. WTI futures were closed on Monday for the U.S. Labor Day holiday.
Analyst Priyanka Sachdeva at Phillip Nova noted that oil prices are finding short-term support from expectations of Fed easing, which is improving demand sentiment. Traders are now watching U.S. labor data this week before the Fed’s September meeting. Weak payroll numbers in July already raised the chances of a rate cut.
Ukraine Strikes Hit Russian Oil Supply
On the supply side, Ukraine’s drone attacks have shut down oil facilities representing about 17% of Russia’s processing capacity, or roughly 1.1 million barrels per day, according to Reuters estimates.
Ukrainian President Volodymyr Zelenskiy said on Sunday that Kyiv plans new strikes deeper inside Russia after weeks of targeting Russian energy assets. Both countries have intensified airstrikes recently. Russia has hit Ukraine’s energy and transport systems, while Ukraine has focused on refineries and pipelines.
Daniel Hynes, senior commodity strategist at ANZ, warned that risks to Russian energy infrastructure remain high. Ukraine struck more refineries over the weekend, escalating pressure on supply.
China, India, and OPEC+ in Focus
Geopolitics added another layer of uncertainty. Chinese President Xi Jinping pushed his call for a new global security and economic order during a summit with Russia and India. China and India remain the biggest buyers of Russian crude. President Donald Trump has imposed additional tariffs on India over its purchases, but not on China.
Attention also turns to OPEC+ ahead of its September 7 meeting. Markets expect the group to keep production unchanged after gradually unwinding cuts in recent months. The International Energy Agency (IEA) noted that oil supply is now growing faster than demand, raising the risk of a surplus.
ING analysts added that the larger risk for prices is OPEC+ reinstating supply cuts to balance the market.
