Oil prices settled more than 2 per cent higher on Friday and posted a weekly gain amid supply concerns as a result of the war between Ukraine and Russia.
Brent, the global benchmark for crude oil, added 2.19 per cent to close at $64.39 per barrel. West Texas Intermediate, the US gauge for crude, jumped 2.39 per cent to $60.09 per barrel.
From last week's close, Brent gained 1.2 per cent, while WTI added 0.57 per cent. Year-to-date, the gauges have lost about 14 per cent and 16 per cent, respectively.
“Crude futures leapt ... early on Friday on the back of reports of Ukrainian drone strikes causing fire and damage at Russia’s major Black Sea port of Novorossiysk overnight," said Vandana Hari, chief executive of Singapore-based Vanda Insights.
“The Sheskharis transshipment complex at the port suffered fire and damage from the attacks,” she said, referring to a report by Ukrainian news agency UNN.
The Sheskharis complex is a major oil export terminal that serves as the endpoint for pipelines run by Russia's state-run Transneft, the world's largest oil pipeline company, the Kyiv Independent news website reported. It is not known how much oil is exported from the terminal.
Oil prices continue to be affected as Ukraine war, now in its fourth year, drags on. Last month, prices jumped about 5 per cent on supply-related concerns after the US announced sanctions on two major oil companies – Lukoil and Rosneft.
The sanctions prohibit transactions with the Russian companies after November 21 and traders are watching how this will impact oil markets. The administration of US President Donald Trump is focused on reducing Russian oil revenue to end the conflict.
Traders are also keeping an eye on higher supply hitting oil markets next year as the International Energy Agency on Thursday “bumped up its implied 2026 average surplus to 4.1 million barrels per day from four million barrels per day last month", Ms Hari said.
This came after the Paris-based agency predicted continued demand for oil in the coming years amid pro-fossil fuel policies being pushed by the Trump administration in the US, one of the biggest producers of oil and gas in the world.
Global demand for oil will continue to rise to 2050, reaching 105 million bpd by 2035 and hitting 113 million bpd by 2050, the IEA said in a report this week.
Opec+ is also boosting production amid a steady global economic outlook and healthy market fundamentals. This month, it agreed to another output increase of 137,000 bpd for December.
This was the ninth time the super group of eight producers, which includes the UAE, Iraq, Kuwait, Kazakhstan, Algeria and Oman, raised production this year as it continues to unwind cuts introduced two years ago. However, Opec+ decided to pause production increments in January, February and March due to seasonality.
