Oil prices climbed approximately 1% on Friday, following a Ukrainian drone attack on an oil depot in the strategic Russian export hub of Novorossiysk. The incident has heightened supply concerns in global energy markets, temporarily offsetting recent oversupply pressures.

Brent and WTI Climb Amid Supply Disruption

By 0900 GMT, Brent crude futures had risen 66 cents (1.05%) to $63.67 per barrel, while U.S. West Texas Intermediate (WTI) advanced 70 cents (1.19%) to $59.39 per barrel. Both benchmarks initially surged over 2% in early Asia trading before paring some gains as the market assessed broader supply and demand dynamics.

The attack damaged a ship, residential buildings, and an oil depot in Novorossiysk, injuring three crew members aboard the vessel. Consequently, the port temporarily halted oil exports, according to industry sources.

Giovanni Staunovo, commodity analyst at UBS, noted:
“The intensity of these attacks has increased, it’s much more often. Eventually they could hit something that causes lasting disruption.”

Russian Oil Supply and Exports

Crude oil shipments through Novorossiysk reached 3.22 million tonnes (761,000 barrels per day) in October, with 1.794 million tonnes of oil products exported, according to industry data. Investors are closely monitoring the impact of both ongoing attacks and Western sanctions on Russia’s oil supply and trade flows.

The U.S. has imposed sanctions banning deals with Lukoil and Rosneft from November 21, aiming to pressure the Kremlin over the conflict in Ukraine. JPMorgan analysts noted that around 1.4 million barrels per day of Russian oil, nearly a third of seaborne export capacity, are being held in tankers due to slowed unloading amid sanctions.

Market Oversupply Caps Gains

Despite the short-term spike in prices, Brent and WTI remain under weekly pressure. Both benchmarks fell about 3% on Wednesday, influenced by an OPEC report projecting that global oil supply will meet demand in 2026, a shift from prior expectations of a supply deficit.

Additionally, the U.S. Energy Information Administration (EIA) reported a larger-than-expected rise in crude oil inventories, with stocks climbing 6.4 million barrels to 427.6 million barrels in the week ending November 7. Gasoline and distillate inventories fell less than anticipated, further weighing on prices.

Global Energy Market Outlook

While geopolitical risks, including Ukrainian attacks and Western sanctions, temporarily boost oil prices, the broader market remains influenced by oversupply concerns and high global inventories. Traders are balancing the potential for Russian supply disruptions against expectations of continued production and stockpiling elsewhere.