Oil benchmarks edged higher on Tuesday, continuing the previous session’s upward trend, as investors weighed the potential impact of escalating Ukrainian drone strikes on Russia’s refining sector.
The attacks, aimed at weakening Moscow’s ability to sustain its war effort, have reignited fears of global supply disruption.
Brent crude futures climbed 15 cents to trade at $67.59 a barrel near 9:30 AM, while US West Texas Intermediate (WTI) also gained 15 cents to $63.45. On Monday, Brent had settled 45 cents higher at $67.44 and WTI advanced 61 cents to $63.30, reported Reuters.
Supply Risks in Focus
Ukraine’s intensification of strikes on Russia’s energy infrastructure has placed a spotlight on the vulnerability of global oil markets. Russia, which contributes more than 10 per cent of the world’s crude output, remains a pivotal supplier despite Western sanctions.
“Heightened fears of supply disruptions from Russia, a key producer accounting for over 10% of global oil output, is helping oil prices,” said Tony Sycamore, market analyst at IG, in a client note.
JP Morgan analysts warned that attacks on critical assets such as Russia’s Primorsk export terminal are designed to curb Moscow’s ability to ship crude to overseas markets. “More importantly, the attack suggests a growing willingness to disrupt international oil markets, which has the potential to add upside pressure on oil prices,” they said.
Macro Factors Add Support
Beyond geopolitical risks, oil markets are also being shaped by wider economic conditions. Investors are closely watching the US Federal Reserve’s policy meeting on September 16–17, where an interest rate cut is widely anticipated. Lower borrowing costs could stimulate economic activity and, in turn, fuel demand.
“A weaker US dollar, driven by expectations of a Federal Reserve rate cut this week, further supported crude oil,” Sycamore noted. The dollar index slipped to its lowest level in nearly a week, making oil cheaper for holders of other currencies.
Inventory Trends and Demand Outlook
Market participants are also looking ahead to official US inventory data due Wednesday. Analysts expect a drawdown in crude stocks after recent builds. Walt Chancellor, energy strategist at Macquarie Group, forecast a decline of 6.4 million barrels for the week ending September 12, reversing the prior week’s 3.9 million barrel increase.
A Reuters poll of analysts suggested US crude and gasoline inventories likely fell last week, though distillate stocks were expected to rise.
The convergence of geopolitical risk, monetary policy expectations, and inventory forecasts has created a fragile but supportive backdrop for oil prices. While supply fears linked to Russia provide near-term momentum, traders remain cautious, balancing short-term price gains with uncertainty over longer-term market stability.
