Oil prices inched up as supply concerns emerge

In the global commodity market, prices of crude oil increased during early hours on Monday as supply concerns emerged following Ukraine’s drone attacks on Russian energy infrastructure. Brent crude was trading at $67.37 per barrel, up 0.07% from the previous close of $67.32. The US benchmark West Texas Intermediate rose 0.08% to $63.71 from $63.66 in the prior session. A Ukrainian drone triggered a fire at Russia’s Kursk Nuclear Power Plant after being downed overnight, damaging a transformer and forcing a 50% reduction in output at one of its reactors, the plant’s press service said early Sunday. The Kursk facility, one of Russia’s largest, supplies electricity to 19 regions in the Central Federal District. Separately, Aleksandr Drozdenko, governor of Russia’s northwestern Leningrad region surrounding the city of St. Petersburg, reported a fire at the terminal in the settlement of Ust-Luga following the crash of a downed drone. He claimed on Telegram that 10 Ukrainian drones were shot down over the port, located near Russia’s border with Estonia, early Sunday. Drozdenko added that Novatek, the Russia-based natural gas producer operating the terminal, started repair and restoration work at the site.
Ukraine’s General Staff later confirmed that the military, together with the country’s Security Service, inflicted damage to infrastructure at the Ust-Luga terminal, which it defined as a key logistics hub for Russia in the Baltic Sea used for energy exports through its “shadow fleet” – sea vessels allegedly used to skirt oil sanctions on Moscow.
Further, US President Donald Trump said on Friday that he will know in two weeks whether progress can be made toward ending the Russia-Ukraine war, while also hinting at possible sanctions against Moscow. These developments heightened geopolitical risk concerns, lending upward support to oil prices. Markets were also buoyed by US Federal Reserve Chair Jerome Powell’s remarks at the Jackson Hole Economic Policy Symposium on Friday. His dovish comments strengthened expectations of a September rate cut, further supporting crude prices. “With policy in restrictive territory, the baseline outlook and shifting balance of risks may warrant adjusting our policy stance,” Powell said. Lower interest rates typically are expected to stimulate growth and increase oil demand, adding further support to prices.