Oil prices held steady on Tuesday as markets weighed potential supply disruption from Russia after Ukrainian drone attacks on its refineries and the prospect of a US central bank interest rate cut.
Brent crude futures slipped 20 cents, or 0.3 per cent, to $67.24 a barrel by 0819 GMT, while US West Texas Intermediate crude was at $63.11, down 19 cents, also 0.3 per cent. On Monday, Brent settled up 45 cents at $67.44 while WTI settled 61 cents higher at $63.30.
Ukraine has intensified attacks on Russia’s energy infrastructure in an attempt to impair Moscow’s war capability, as talks to end their conflict have stalled.
“An attack on an export terminal like Primorsk is aimed more at limiting Russia’s ability to sell its oil abroad, affecting export markets,” said JP Morgan analysts.
“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.
Goldman Sachs estimates that the Ukrainian attacks have taken out about 300,000 barrels per day of Russian refining capacity in August and so far this month.
“While the uncertainty around secondary tariffs and additional sanctions remains high, we assume only modestly lower Russian production as Asian buyers continue to signal willingness to import Russian crude,” the bank said.
US Treasury Secretary Scott Bessent on Monday said the government would not impose additional tariffs on Chinese goods to encourage China to halt purchases of Russian oil unless European countries hit China and India, the biggest buyers of Russian crude, with duties of their own.
Also on investors’ radar is the US Federal Reserve’s September 16-17 meeting, at which the bank is widely expected to cut interest rates.
While lower borrowing costs typically boost fuel demand, analysts were cautious on the health of the overall US economy.
Markets were also factoring in the likelihood of crude inventory declines in the US last week, with official data expected on Wednesday at 1430 GMT.
US crude inventories likely fell 6.4 million barrels for the week ended September 12, following a 3.9 million build a week earlier, energy strategist Walt Chancellor at Macquarie Group said in a client note.
A Reuters poll on Monday showed analysts expected US crude oil and gasoline stockpiles to have fallen last week, while distillate inventories likely rose.
