Oil prices experienced a slight increase on Monday as escalating conflict between Russia and Ukraine captured global attention. Brent crude rose by 55 cents (0.8%) to $71.59 a barrel, while U.S. West Texas Intermediate crude climbed 43 cents (0.6%) to $67.45. Over the weekend, Russia launched its largest airstrike on Ukraine in nearly three months, severely impacting Ukraine’s power infrastructure.
In a notable policy shift, the Biden administration has permitted Ukraine to use U.S.-manufactured weapons to strike deeper into Russian territory. This decision, confirmed by U.S. officials, prompted Moscow to accuse Washington of direct involvement in the conflict and further escalating the situation. Analysts have suggested this move could reintroduce geopolitical risks to the oil market, especially if Ukraine targets energy infrastructure in Russia.
While the conflict stirs uncertainty, the overall sentiment in the oil market remains cautious. Weak economic data from China, the world’s second-largest oil consumer, contributed to a 3% decline in oil prices last week. The International Energy Agency projected a global oil surplus of over one million barrels per day by 2025, even if current OPEC+ production cuts remain. China’s declining refinery throughput and slower industrial growth in October added to concerns about demand.
The market is also grappling with uncertainty stemming from U.S. Federal Reserve policies. Investors are wary of the timing and magnitude of interest rate adjustments, which continue to cast a shadow over global financial markets. Despite the geopolitical backdrop, worries about oversupply and weak demand remain central to oil traders’ calculations.
Union Jack Oil plc (LON:UJO) is an oil and gas company with a focus on onshore production, development, exploration and investment opportunities within the United Kingdom and the United States of America hydrocarbon sector.
