Oil prices rise as Ukraine drone strikes refinery in Russia

In the global commodity market, the prices of crude oil rose on Tuesday as markets remained on edge, driven by mounting risks to energy infrastructure from the Russia-Ukraine war, easing trade tensions between the US and China, and uncertainty over the Federal Reserve’s (Fed) rate decision. Brent crude was trading at $67.26 per barrel, up 0.1% from the previous close of $67.18. US benchmark West Texas Intermediate increased by 0.2% to $63.17 from $63.03 in the prior session. On September 14, an overnight Ukrainian drone strike ignited a fire at the Kirishi oil refinery in Russia’s north western Leningrad region.
Russia’s Kirishi refinery in the Leningrad region, operated by oil and Gas Company Surgutneftegas and one of the country’s major processing facilities, shut a key processing unit after a Ukrainian drone strike over the weekend caused a fire that damaged equipment. Repairs are expected to take about a month. The unit accounts for roughly 40% of the plant’s capacity, or around 400,000 barrels a day. According to Leningrad Governor Alexander Drozdenko, debris from three downed Ukrainian drones caused the blaze. Ukrainian drone attacks targeting Russia’s energy infrastructure to weaken Moscow’s war capability have heightened concerns over potential supply disruptions, supporting prices.
Positive developments from US-China talks also added further upside to oil prices. US Treasury Secretary Scott Bessent said the Trump administration would not impose unilateral tariffs to curb China’s Russian oil purchases, though the option could be considered if Europe imposes steep duties on China and India.
Expectations that the move could boost economic activity and fuel demand lifted oil prices. Meanwhile, investors are focused on the Fed’s upcoming meeting. Markets are pricing in a near-certain 25-basis-point rate cut tomorrow, with a total of three cuts expected by year-end. The anticipated rate reductions are seen supporting fuel demand through lower borrowing costs.