Market News

(Bloomberg) -- Oil extended gains on fears that mounting Ukrainian drone attacks may disrupt flows through Russia’s two most important crude-exporting hubs on the Baltic coast.

West Texas Intermediate advanced about 1.5% to top $63 a barrel. The strikes have temporarily suspended operations at Primorsk, the main oil-loading port in the region, and targeted three pumping stations pushing crude to the Ust-Luga hub, a person familiar with the situation said. “We expect that Ukraine will step up their attacks on Russian energy infrastructure as a ceasefire is still unlikely, and support prices through destruction of oil supply,” Joe DeLaura and Florence Schmit, energy strategists at Rabobank, said in a note, forecasting WTI at $63 a barrel in late 2025.

Adding to the focus on Moscow’s exports, the US will urge its allies in the Group of Seven nations to impose tariffs as high as 100% on China and India for their purchases of Russian oil. Canada, which holds the presidency of the G-7, convened a meeting of the group’s finance ministers on Friday to “discuss further measures to increase pressure on Russia and limit their war machinery,” according to a statement.

The heightened risk premium for crude helped offset an International Energy Agency projection for a record oil supply surplus next year. A more pessimistic report from the agency on Thursday followed a decision by the OPEC+ producer group to keep returning idled barrels to the market in October, albeit at a lower rate than previous hikes.

With WTI buffeted by the competing forces of geopolitical risks and bearish fundamentals, prices have been stuck in a band between roughly $62 and $67 a barrel since early August.

“Today’s narrative has shifted toward sanctions and supply risk rather than oversupply,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “For now, we continue to go nowhere fast.”