Oil prices have risen noticeably over the past few days. Brent climbed to $74.8 per barrel in the morning, gaining almost 5% since the beginning of the week, Commerzbank’s commodity analyst Carsten Fritsch notes.
The conflict in Ukraine escalates
“This week's rise in oil prices was probably triggered by the latest escalation in the war in Ukraine, which has now been going on for more than 1,000 days. In recent days, Russia has carried out heavy attacks on the energy infrastructure and civilian infrastructure in Ukraine. Ukraine has responded by attacking targets in Russia with longer-range weapons systems provided by the West.”
“This raises concerns that energy supplies from Russia could be interrupted if Ukraine targets refineries or export terminals in Russia, which has already happened in the past. Three refineries in Russia recently had to suspend or reduce their processing, as Reuters reported, citing five industry sources. The reasons given included deteriorating margins as a result of higher local crude oil prices and more expensive financing conditions.”
“In addition, the three refineries mentioned have already been hit by Ukrainian drones this year, which has reduced their processing capacity. The prospect of lower Russian diesel exports also caused the gasoil crack spread to rise to just under $19 per barrel this week. The last time it was this high was at the beginning of August.”
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