For the first time in 6 months… oil above $88 with renewed fears of supply impacts

Brent crude prices exceeded $88 per barrel for the first time since October, as oil supplies faced new threats with renewed Ukrainian attacks on Russian energy facilities and the escalation of the conflict in the Middle East.

According to Reuters, Brent crude futures for June delivery rose $1.29, or 1.5%, to $88.71 per barrel by 0912 GMT. US West Texas Intermediate crude futures for May increased $1.30, or 1.6%, to $85.01 per barrel.

Ukraine bombed one of Russia’s largest refineries on Tuesday in a drone attack 1,300 kilometers from the front lines in Ukraine, which Russia initially said it repelled.

An analysis of images showing the impact of the attack indicates that it hit the refinery’s main oil refining unit, which represents about half of the refinery’s total annual production capacity of 340,000 barrels per day.

Markets are also awaiting the meeting of the OPEC+ coalition, which includes the Organization of the Petroleum Exporting Countries (OPEC) and its allies, on Wednesday, which will review the implementation of the group’s oil production cuts.

The coalition is expected to maintain the current voluntary production cuts of 2.2 million barrels per day until the end of the second quarter. OPEC production fell last month by 50,000 barrels per day, suggesting that the voluntary cuts are having some effect.

Manufacturing activity expanded in China in March for the first time in six months, and in the United States for the first time in a year and a half, which the markets considered an indication of high demand for oil. China is the world’s largest importer of crude oil while the United States is the largest consumer.