Oil prices climbed more than 2% on Friday after Russia’s port of Novorossiisk suspended oil exports. The halt followed a Ukrainian drone strike that hit an oil depot in the key Russian energy hub, raising new concerns about global supply.
Brent crude futures increased by $1.43, or 2.27%, reaching $64.44 a barrel by 11 a.m. EDT (1600 GMT). U.S. West Texas Intermediate crude rose $1.54, or 2.62%, to $60.23 a barrel. At these levels, Brent was on track for a weekly gain of 1.26%, while WTI was set for a 0.75% weekly rise.
Russian officials reported that the drone attack damaged a ship in the port, nearby apartment blocks, and an oil depot, injuring three crew members. Phil Flynn, senior analyst at Price Futures Group, said the strike on the terminal appeared to have a larger effect than previous attacks.
Port Exports 2% of Global Supply
The Novorossiisk port halted exports equal to roughly 2.2 million barrels per day, about 2% of global oil supply. Transneft, Russia’s pipeline monopoly, also stopped crude shipments to the port, according to industry sources who spoke to Reuters.
Giovanni Staunovo, a commodity analyst at UBS, noted that the frequency of these attacks is rising. He warned that repeated strikes could eventually cause longer-lasting disruptions. Investors are trying to understand how the latest incident will affect Russia’s supply outlook in the months ahead.
Market watchers are also assessing the pressure from Western sanctions. Britain issued a special licence that allows companies to continue working with two Bulgarian subsidiaries of Lukoil after Bulgaria moved to seize control of the assets.
The U.S. has also imposed new sanctions, banning transactions with Lukoil and Rosneft after November 21 in an effort to push the Kremlin toward peace talks.
JPMorgan reported that around 1.4 million barrels per day of Russian oil have shifted into floating storage as tanker offloading slows under the new sanctions. The bank warned that unloading could face even greater difficulty after the November 21 deadline.
