US oil rallies amid Zaporozhye nuclear power plant fires

US oil is higher on the back of the Zaporizhzhia nuclear power plant in Ukraine, the largest of its kind in Europe, that was set on fire early on Friday after an attack by Russian troops, the mayor of the nearby town of Energodar said.

Ukrainian government officials crossed the Twitter feeds and warned that elevated levels of radiation are being detected near the site of the plant.

There has been fierce fighting between local forces and Russian troops, Mayor of Energodar Dmytro Orlov said in an online post, adding that there had been casualties without giving details.

“As a result of continuous enemy shelling of buildings and units of the largest nuclear power plant in Europe, the Zaporizhzhia nuclear power plant is on fire,” Orlov said on his Telegram channel, citing what he called a threat to world security. 

Ukraine is Europe's second-largest nuclear power producer after France, with nuclear power meeting around 50% of the country's power requirements.

The New York Times reported ''six of Ukraine’s 15 working nuclear reactors have stopped sending power into the nation’s electrical grid — a high rate of disconnection compared with routine operations before the Russian invasion. The reduction in output might result from the war’s interference with operation of the plants, which require a wealth of industrial supplies and care. The cutbacks, Western experts say, may spiral into rolling blackouts that could further cripple the beleaguered country.''

The price of oil, naturally, rose given nuclear it is an alternative energy source. The oil market is also focused on whether the OPEC+ producers, including Saudi Arabia and Russia, would increase output from January. 

''Following Russia's invasion of Ukraine, the US was clear that it wanted the flow of oil and gas to continue unabated. However, due to a combination of financial sanctions and the increasing reluctance of companies to do business with Russia, supply is being impacted. We estimate Russia's oil supply could already be down by 1mb/d. Overall, nearly 5mb/d of Russian crude could be struggling to find a buyer," ANZ Bank said in a note.

The market, overnight, reversed course after reports began circulating that there could be a deal on returning the United States to the 2015 Iran nuclear deal and removing sanctions on its oil exports, offering the prospect of some relief for the loss of Russian supplies.