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Brent Oil Hits Highest Price this Year on Fresh Supply Threats

Brent Oil Hits Highest Price this Year on Fresh Supply Threats

Global oil benchmark Brent on Tuesday rose above $89 a barrel for the first time since October, albeit briefly, as oil supplies faced fresh threats from Ukrainian attacks on Russian energy facilities and escalating conflict in the Middle East.

Brent futures for June delivery were up $1.35, or 1.5%, at $88.76 a barrel by 11:40 a.m. EDT (1540 GMT) after touching a peak of $89.08.

U.S. West Texas Intermediate (WTI) crude futures for May rose $1.27, or about 1.5%, to $84.98 after touching a peak of $85.46, also the highest since October.

A Ukrainian drone struck one of Russia’s biggest refineries on Tuesday in an attack that Russia initially said it repelled.

Russia’s Astrakhan gas processing plant, controlled by energy giant Gazprom (GAZP.MM), opens new tab, also halted production of petroleum products after a repair-related stoppage on March 30, the company said on Tuesday, confirming an earlier report from Reuters.

A Reuters analysis of images showing the impact of the attack suggests it hit the refinery’s primary oil refining unit, which accounts for about half of the plant’s total annual production capacity of 340,000 barrels per day (bpd), though it did not appear to have caused serious damage.

Russia, among the top three global oil producers and one of the largest exporters of oil products, has been contending with a spate of Ukrainian attacks on its oil refineries and has mounted its own attacks on Ukrainian energy infrastructure.

“The likelihood that continued restricted Russian product exports could further tighten US petroleum supplies has suddenly forced re-calculation of US (oil) balances across the rest of this month and possibly beyond,” said Jim Ritterbusch, president of Ritterbusch and Associates LLC.

In the Middle East, Iran has vowed to take revenge on Israel for an airstrike that killed two of its top generals and five other military advisers at the Iranian embassy compound in Damascus.

Israel has been at war against Iran-backed Palestinian group Hamas in Gaza, but direct Iranian involvement could spark a “region-wide conflict with plausible impact on oil supply,” said Tamas Varga at oil broker PVM.

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Elsewhere, an ecological organisation on Tuesday said a European satellite had spotted an oil spill in the northern Caspian Sea near Kazakhstan’s giant Kashagan oilfield.

Markets are also looking ahead to Wednesday’s ministerial panel meeting of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, together known as OPEC+. The panel is unlikely to recommend any change in oil output policy, OPEC+ sources told Reuters.

The demand outlook perked up, meanwhile, as March data showed an expansion in Chinese manufacturing activity for the first time in six months and in the U.S. for the first time in a year and a half.

Reuters

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