Oil Prices Surge as Ukrainian Drones Disrupt Russian Baltic Export Hubs

Oil prices surged above $67 per barrel due to escalating Ukrainian drone strikes targeting Russia's major crude-exporting hubs on the Baltic Sea, particularly suspending operations at the Primorsk port and affecting pumping stations to the Ust-Luga hub. These attacks have increased the geopolitical risk premium, counterbalancing forecasts from the International Energy Agency that predict a record oil supply surplus next year, despite OPEC+ plans to gradually reintegrate idle barrels into the market at a slower pace. The market is experiencing significant volatility as it balances bearish supply fundamentals against heightened geopolitical concerns and strong refined product margins, leaving Brent crude oscillating between $65 and $70 per barrel since early August. Additionally, the Trump administration is reportedly urging G7 allies to impose tariffs of up to 100% on China and India for purchasing Russian oil, aiming to pressure President Putin to negotiate an end to the war in Ukraine, following Moscow's intensified bombing campaign. Analysts and market participants remain cautious, anticipating continued price fluctuations amid these competing forces and geopolitical tensions. Overall, oil markets are caught in a complex interplay of supply surplus expectations and increased geopolitical risks tied to the ongoing conflict and international sanctions efforts.