Oil Rises In Aftermath of Ukraine Attacks On Russia, Supply Fears Stoked

But, ironically, the main analytical view remains one of global oversupply: File Image/Pixabay

The likelihood the Russia/Ukraine war will continue despite Washington's attempt to broker a peace deal, plus further sanctions against the former Soviet Union, was enough to cause a crude price increase of over 1.5 percent on Monday.

Brent settled up $1.07, or 1.58 percent, at $68.80 per barrel, while West Texas Intermediate settled up $1.14, or 1.79 percent, to $64.80.

Ukraine staged three attacks on the Druzhba pipeline that carries crude from Russia to Hungary and Slovakia, then over the weekend it focused on Russia itself, targeting a nuclear power plant and the fuel export terminal in Us-Luga – and causing analysts to worry that the risk of supply disruption would push global oil prices higher.

Still, the overall take on the oil market is one of bearishness, and Bloomberg noted that "Oil's gains are being limited by continued expectations that global markets will face a supply glut after peak summer demand ends… crude has dropped more than 10 percent this year on concerns that U.S. tariffs will hurt economic growth just as OPEC+ nations are returning idled production."

As for the geopolitical situation, Ole Hansen, head of commodity strategy at Saxo Bank, said, "The market is somewhat concerned that these peace negotiations are going nowhere."

Also said to support oil prices on Monday was the ongoing expectation that Jerome Powell, chair of the U.S. Federal Reserve, would enact another rate cut in September, and ING estimated that the probability of a cut rose from 72 percent to 85 percent in recent days.

In other oil news on Monday, Kazakhstan insisted that international oil majors including Eni, Shell, ExxonMobil, and TotalEnergies pay $4.4 billion fine for sulfur pollution, even though a Kazakh appellate court earlier overturned the fine over sulphur storage practices, deeming them as meeting both Kazakh legal requirements and global industry standards.

Kazakhstan claims that majors had improperly stored sulfur byproducts at the $55 billion Kashagan project, and it has also taken them to international arbitration over $160 billion in alleged damages.