OPEC, Ukraine Drone Attacks Drive Oil Prices Upward

by Ship & Bunker News Team
Monday March 25, 2024

Oil on Monday reversed course from the past few sessions and settled upwards due to what could be called the status quo: continued drone strikes by Ukraine on Russian refining facilities, and the Organization of Petroleum Exporting Countries (OPEC) reportedly not seeing a need to change its output policy.

Brent settled up $1.32 at $86.75 per barrel, while West Texas Intermediate settled up $1.32 at $81.95. 

Oil was also supported by Goldman Sachs Group Inc., which said in a research note that commodities will advance in 2024 as central banks reduce interest rates; this followed similar predictions made by Macquarie Group Ltd. and Carlyle Group.

Sources told media that drone attacks over the weekend at the Kuibyshev oil refinery in the city of Samara knocked out half of its capacity, and Reuters calculated that the string of attacks by Ukraine this month that have shuttered 7 percent of total refining capacity in Russia.

For the record, British Intelligence estimated that the percentage is more on the order of 10 percent, and the British Ministry of Defense pointed out that "Depending on the extent of the damage, major repairs could take considerable time and expense."

As for OPEC, in advance of key members meeting online next week, several officials told media that the cartel see no need to recommend changes to oil supply policy, meaning it will likely maintain the latest cutback extensions totalling 2.2 million barrels per day (bpd), scheduled to be in place through to the end of June.

For its part, Russia reportedly ordered companies to cut oil output to meet Moscow's commitments to OPEC.

In other oil news on Monday, a new World Bank report postulated that disruptions in the Black Sea region caused by Russia's invasion of Ukraine may continue to hinder Kazakhstan's oil exports, a major revenue driver for the state's budget; the bank forecast growth of about 3.4 percent in 2024 due to lower-than-expected oil production/revenue, with GDP projected to pick up in 2025 at 4.5-5 percent.