Oil Surges to Highest Level Since November Amid Concerns Over Black Sea Tensions

 Crude oil prices have surged to their highest point in nearly nine months, driven by growing apprehension regarding the potential escalation of tensions between Russia and Ukraine, which could disrupt supplies in a market that is already experiencing tightening conditions.

West Texas Intermediate (WTI) futures have surpassed the $83 per barrel mark, surpassing the previous high set in April this year. The spotlight is now on the vulnerability of Russian oil shipments through the Black Sea, prompted by Ukrainian President Volodymyr Zelenskiy’s statement about taking action to prevent the OPEC+ producer from impeding their maritime activities. This declaration follows a recent drone attack by Ukraine on an oil tanker over the weekend.

Ole Hansen, the head of commodities strategy at Saxo Bank, remarked, “The persistent risks associated with Russian crude shipments due to the tensions in the Black Sea persist, maintaining the underlying bullish sentiment despite concerns arising from the Chinese economy.”

Key indicators in the market have been signaling tighter conditions in recent days. The closest timespread for WTI crude reached its strongest level since November, with a continuous decline in stockpiles at the significant storage hub in Cushing, Oklahoma over the past five weeks.

According to sources familiar with the matter, the American Petroleum Institute, which is funded by the industry, reported a 4.07 million barrel increase in US crude stockpiles during the previous week. If this is confirmed by government data on Wednesday, it would mark the first gain in four weeks.

The rally in oil prices has been underway since late June, following commitments by influential OPEC+ members Saudi Arabia and Russia to reduce oil supply. However, challenges persist. China’s economic recovery remains sluggish, and the Energy Information Administration recently lowered its projection for US fuel consumption this year.

In the coming days, the International Energy Agency and OPEC are set to release reports that will offer insights into the oil market’s trajectory, which is anticipated to tighten further in the second half of the year.