Crude prices slipped after Russia resumed exports from the Novorossiysk hub, reversing last week’s disruption-driven gains.
Geopolitical risk remains elevated as Ukraine continues strikes on Russian oil infrastructure and new sanctions loom.
Oversupply concerns persist due to OPEC+ output levels and a modest rise in U.S. drilling activity.
Oil prices moved lower in early Asian trading on Monday, erasing the modest gains posted last week, as crude loadings resumed at the key Russian export hub of Novorossiysk following a two-day suspension of operations at the Black Sea port. At the time of writing, front-month Brent crude futures had dropped by 64 cents to $63.75 per barrel, while WTI crude futures were trading at $59.43 per barrel, down 66 cents from Friday’s close.
Last week’s rally of more than 2% for both benchmarks was underpinned by a disruption at Novorossiysk and a neighbouring terminal operated by the Caspian Pipeline Consortium. The resumption of loading operations at Novorossiysk was confirmed by industry sources and supported by data from LSEG, signalling that the immediate supply pressure had eased.
That said, the broader context remains one of conflicting signals. On the one hand, Ukrainian forces continue their campaign of attacks against Russian oil infrastructure, with Ukraine striking the Ryazan refinery on Saturday. On the other hand, the market is grappling with a growing perception of oversupply, driven in large part by the output decisions of OPEC+.
Further complicating the backdrop are sanctions-related risks and upstream U.S. production activity. Western sanctions targeting Russian oil firms such as Lukoil and Rosneft are set to deepen after 21 November, and U.S. officials are considering legislation to penalize any country doing business with Russia. Meanwhile, the U.S. rig counts rose by three to 417 in the week to 14 November, according to data from Baker Hughes, indicating a modest uptick in upstream activity.
While the return of exports at Novorossiysk removed an immediate threat to supply, the underlying vulnerabilities remain. Continued attacks on Russian export infrastructure, the effect of sanctions, and the forward production ramp by OPEC+ are all factors that will keep traders on their toes this week.
By Charles Kennedy for Oilprice.com
More Top Reads From Oilprice.com
Back to homepage
