Oil prices rose 1% on Monday, despite tensions in the Middle East and drone attacks on Russian refineries. Oil posted its worst month of the year for May. However, prices bounced back today, June 25, 2024, mainly on hopes that the market will tighten summer demand for gasoline and diesel (WTI crude oil is around $81.50 per barrel and Brent crude oil is around $85.70 per barrel). Geopolitical risks in the Middle East and an increase in Ukrainian drone attacks on Russian refineries have also supported oil prices. EU countries agreed on a new package of sanctions against Russia on Monday, including a ban on the transhipment of Russian liquefied natural gas in the EU for onward shipment to third countries. Tamas Varga, an analyst at brokerage PVM, said: “The main underlying reason for the oil price strength is the growing confidence that global oil inventories will inevitably decline over the Northern Hemisphere summer.”
Russia has recently increased global tensions by blaming the US for the Ukrainian missile attack in occupied Crimea and warning of unspecified “consequences” of a possible retaliatory attack. The European Union has also imposed sanctions on 27 ships that are commercially linked to Russia. Oil supply risks are now back in the spotlight as tensions on the Israeli-Lebanese border increase. Prime Minister Benjamin Netanyahu has said Israel will redeploy its forces to the north of the country once the intense phase of the Gaza war is over. Adding to the concern and global worry over the oil price is the statement by Ukrainian President Volodymyr Zelensky, who said through a press release on Monday that Kiev had hit more than 30 Russian oil refineries, terminals and bases, without the president saying exactly when the attacks occurred.
Monthly price movements of US WTI light crude oil over 12 months:
