Oil prices extend gains; Russian attacks, U.S. crude stocks in focus

Investing.com-- Oil prices rose strongly Wednesday, lifted by a larger-than-expected draw in U.S. crude inventories as well as further attacks to Russia’s petrochemical infrastructure.

At 08:20 ET (12:20 GMT), Brent Oil Futures expiring in November rose 1.3% to $68.51 per barrel, while West Texas Intermediate (WTI) crude futures also gained 1.4% to $64.27 per barrel.

Both contracts climbed around $1 a barrel on Tuesday after a deal to restart flows of about 230,000 barrels per day from Kurdistan through Turkey was delayed after producers refused to resume shipments without guarantees on repayment of arrears. 

Russia supplies under attack

The Salavat petrochemical complex, one of Russia’s largest, was attacked by Ukrainian drones, the local governor said on Wednesday, the second such attack in less than a week.

The drones also attacked the same complex, controlled by energy giant Gazprom, last week.

Ukraine has intensified drone attacks on Russia’s vast oil and gas infrastructure in the past weeks, targeting refineries and export-bound pipelines, as peace talks have stalled, looking to deprive Moscow of funds to wage is war against Ukraine. 

Russia is seeing shortages of certain fuel grades as the attacks have reduced refinery runs, and as high borrowing costs mean private filling stations cannot afford to stockpile fuel, according to traders and retailers.

Ukrainian drones earlier this month also hit an oil refinery in Ufa, Bashkortostan’s regional capital, about 1,400 kilometres (870 miles) from the Ukrainian border.

The Salavat petrochemical complex produces gasoline, diesel, kerosene and other petroleum products as well as liquefied gases, butyl alcohols, polyethylene, polystyrene and ammonia.

Geopolitical tensions were further raised after U.S. President Donald Trump told the United Nations General Assembly that NATO nations should shoot down Russian aircraft if they violate alliance airspace and said Ukraine could reclaim all of its territory from Russia. 

The remarks marked a sharp rhetorical shift in Washington’s stance and were seen as raising the risk of further sanctions on Russian energy exports, which could squeeze global supply.

U.S. crude stockpiles drop - API

Industry data added to the bullish tone. The American Petroleum Institute said on Tuesday that U.S. crude stocks fell by 3.82 million barrels in the week ended Sept. 19.  

Gasoline inventories also declined, though distillates rose modestly. The data pointed to resilient demand and a tighter near-term balance in the world’s largest oil consumer.

However, oversupply worries remain, with the International Energy Agency forecasting that world oil supply would rise more rapidly this year and a surplus could expand in 2026 as OPEC+ members increase output and supply from outside the group grows.

Ayushman Ojha contributed to this article