International Oil Prices Reach Highest in 5 Months
Approaching $90... Pressure from Rising Prices
Drone Attacks Continue Despite US Restraint Requests
Ukraine's drone attacks on oil refineries deep within Russia have raised global concerns over a potential disruption in oil supply. International oil prices have surged to their highest levels in five months, approaching $90 per barrel, reigniting inflation fears and unsettling the global economy.
With the U.S. presidential election in November imminent, the Biden administration is urging the Ukrainian government to halt attacks on Russian mainland refineries to stabilize prices and prevent escalation. However, Ukraine insists it will continue drone strikes without U.S. support, intensifying tensions between the two sides. Should Ukraine persist with unilateral drone attacks, experts predict continued volatility in international oil prices.
Factories and Refineries Deep Inside Russia, 1,300 km from Border, Targeted
According to TASS news agency on the 2nd (local time), factories and refineries in the Republic of Tatarstan, located in western inland Russia, were attacked by Ukrainian drones, resulting in 13 injuries. Tatarstan leader Rustam Minnikhanov stated via his Telegram account, "This morning, drone attacks occurred in Yelabuga and Nizhnekamsk, Tatarstan."
This area is over 1,300 km away from the Ukrainian border, marking the first drone attack in this region since the outbreak of the Ukraine war. Nearby is the Yelabuga Special Economic Zone, home to chemical, machinery, and metal-related factories and facilities. The TANECO refinery in Tatarstan, Russia's third-largest refinery, was also targeted by drone strikes.
International Oil Prices Approaching $90... WTI Surpasses $85
Ukraine's attacks on oil facilities deep within Russia have stoked fears of supply shortages, driving international oil prices higher. On this day, West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX) rose 1.72% to $85.15 per barrel, while Brent crude on the London ICE exchange increased 1.72% to $88.92 per barrel. Both prices reached their highest levels in five months.
With prices nearing $90 per barrel, concerns grow that if Russia halts refinery operations in response to Ukrainian drone attacks, oil prices could surge further. Russian authorities have already suspended operations at some refineries, reducing daily refining capacity by 900,000 barrels, equivalent to 14% of Russia's total refining volume. JPMorgan noted regarding the rising oil prices, "If Russia's production cuts and OPEC+ extend their June cuts through the end of the year, the situation will worsen," adding, "Brent crude could surpass $90 per barrel this month and potentially reach $100 by September."
Despite U.S. Requests for Restraint Ahead of Election... "No Reason to Keep Promises to U.S. That Doesn't Support Us"
As Ukraine's drone attacks cause international oil prices to fluctuate, the U.S. government faces a difficult position ahead of its election. The U.S. government's persistent demands for Ukraine to restrain drone attacks stem from this concern. However, with U.S. support for Ukraine stalled in Congress for an extended period, Ukraine continues its attacks on Russian mainland targets.
CNN cited a U.S. government official saying, "If Ukraine does not receive the promised weapons and funds from the U.S., there is no reason for them to comply with requests to restrain attacks."
Experts warn that if Ukraine expands its attacks beyond Russian refineries to major port facilities and oil tankers, international oil prices could become even more volatile.
Helima Croft, Global Head of Commodity Strategy at RBC Capital, told CNN, "Major port facilities responsible for about two-thirds of Russia's oil exports are within the range of Ukrainian drone attacks," adding, "Targeting refineries is intentional, and if the intensity increases to include oil export ports, the impact on the market will be significant."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
