Ukraine-Russia War: Oil Prices Soar to $86, Reaching a Four-Month Peak

The international oil market witnessed a significant surge on Monday, with crude prices reaching an impressive $86 per barrel, marking the highest point in four months.

This recent climb in prices is largely attributed to the positive economic indicators from China and the escalating tensions in the Ukraine-Russia conflict, specifically through drone attacks on Russian oil facilities.

Brent futures, the global oil benchmark, saw a 4% increase from the previous week, trading at $86 per barrel by mid-morning GMT. Similarly, the US benchmark, West Texas Intermediate, surpassed the $81 mark, reflecting a robust upward movement in the oil markets.

This upward trajectory in oil prices is buoyed by China’s better-than-expected macro-economic data, which has injected a wave of optimism about the country’s economic prospects. Despite some challenges, the overall outlook for global trade appears to be improving, as noted by Rolf Habben Jansen, the CEO of Hapag-Lloyd, a leading global ocean carrier. The depletion of inventories and the recovery post-Chinese New Year are contributing factors to the positive market sentiment.

Adding to the mix, recent Ukrainian drone strikes on Russian oil refineries have intensified geopolitical risks, further fueling the rise in crude prices. Over the weekend, Ukrainian UAVs targeted several facilities in Russia, including a notable attack in the Samara region, which set ablaze a processing unit at Rosneft’s refinery in Syzran. Although some attempts were intercepted, the strikes have added a noticeable risk premium to crude prices.

Market analysts, such as Vandana Hari of Vanda Insights, suggest that these geopolitical developments have contributed an additional $2 to $3 per barrel in risk premium, a factor that continues to influence market dynamics as the situation unfolds.