Oil Prices Edge Higher as Geopolitical Risks Escalate

Highlights:

• Price Rise: West Texas Intermediate crude climbed 1% to trade above US$63 a barrel at the time of writing.
• Geopolitical Tensions: Ukrainian drone strikes on Russia’s Kinef refinery and Primorsk export hub raise supply concerns.
• Sanctions Pressure: U.S. President Donald Trump pushes Europe to halt Russian oil imports, while Washington signals caution.

Gains Continue Amid Supply Concerns

Oil prices extended last week’s upward momentum as traders assessed escalating geopolitical tensions alongside forecasts of a potential supply surplus later this year. At the time of writing, West Texas Intermediate (WTI) crude was trading just above US$63 a barrel, marking a 1% rise after gaining 1.3% the previous week.

Russian Oil Assets Targeted

Recent strikes in the Russia-Ukraine conflict have intensified supply concerns, with Ukrainian drones hitting the Kinef refinery, one of Russia’s major oil-processing sites, over the weekend.

This followed an earlier strike on Primorsk, a major Baltic Sea export hub. Both incidents underscore the vulnerability of Russia’s energy infrastructure and the potential disruption to global oil flows.

Traders are now closely monitoring the frequency of such attacks, which, if sustained, could tighten markets despite expectations of a surplus later in the year.

Political Pressure Intensifies

Geopolitics also weighed on market sentiment after the U.S. President Donald Trump renewed calls for European nations to halt purchases of Russian oil. He signaled readiness to pursue “major” sanctions on Moscow’s crude exports if NATO allies agree to follow suit. However, U.S. Treasury Secretary Scott Bessent struck a more cautious note, clarifying that Washington would only enforce such measures in coordination with Europe. This divergence in messaging reflects the complex balancing act between foreign policy objectives and energy market stability.

Market Outlook

Analysts suggest that while the prospect of a global surplus in the second half of the year remains, geopolitical risks could overshadow supply-and-demand fundamentals in the near term. For now, traders remain focused on how both sanctions rhetoric and military actions in Eastern Europe will shape oil price movements in the weeks ahead.

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