Geopolitical tensions fuel oil prices

Crude oil prices rose on the global commodity market yesterday as geopolitical tensions escalated after Ukraine targeted several Russian military air bases as Kiev and Moscow prepared for peace talks in Istanbul, dmarketforces.com reported.

On Sunday, Ukraine's Security Service (SBU) claimed to have destroyed 34 percent of Russia's strategic bombers capable of carrying strategic cruise missiles during attacks on Russian military air bases. Ukrainian forces attacked Russian military airfields with unmanned aerial vehicles (UAVs), the SBU said, carrying out a special operation codenamed "Spider Web,” causing $7 billion in damage to Russia's strategic aviation.

As the fighting in the war between Russia and Ukraine intensifies, attention turned yesterday to the talks between the two sides, which were taking place in Istanbul. Previous negotiations between the two sides took place on May 16 at the Dolmabahce Palace in Istanbul.

The prospect of new US sanctions against Russia, if an agreement with Ukraine is not reached soon, is fueling concerns about oil supplies and leading to a rise in prices in the market. Last week, international media reported that US President Donald Trump was expected to adopt additional sanctions against Russia.

In this context, the price of a barrel of Brent oil for delivery in August rose by 3.9% in the second half of yesterday, on ICE Futures Europe, reaching $ 65.20. On the US Nymex, West Texas Intermediate (WTI) crude for July delivery rose 4.3% to $63.39 a barrel by 06:55 local time. The advance came even as OPEC+ members decided to increase crude output.

The alliance, made up of the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC producers, agreed to increase crude supply by 411,000 barrels per day from July.

The decision, taken by Saudi Arabia, Russia, Iraq, the United Arab Emirates, Kuwait, Kazakhstan, Algeria and Oman, was in line with expectations. The increase is similar to those in May and June. By the end of July, the group will recover more than 60% of the planned supply increases of 2.2 million barrels per day.

Morgan Stanley predicts that OPEC+ will restore all previously reduced production by 2.2 million barrels per day by October, according to oilprice.com.