(Bloomberg) — Oil held steady as US threats to sanction Russia’s crude failed to materialize, even as mounting Ukrainian drone attacks increased the prospect that the country’s flows would be disrupted.
West Texas Intermediate edged up 0.5% to settle below $63 a barrel, after earlier climbing as much as 2.6%. Ukrainian strikes temporarily suspended operations at Primorsk, the main oil-loading port in the region, and targeted three pumping stations pushing crude to the Ust-Luga hub, a person familiar with the situation said. Those are Russia’s two most important crude-exporting hubs on the Baltic coast.
“We expect that Ukraine will step up their attacks on Russian energy infrastructure as a ceasefire is still unlikely, and support prices through destruction of oil supply,” Joe DeLaura and Florence Schmit, energy strategists at Rabobank, said in a note, forecasting WTI at $63 a barrel in late 2025.
Adding to the focus on Moscow’s exports, the US will urge its allies in the Group of Seven nations to impose tariffs as high as 100% on China and India for their purchases of Russian oil. Canada, which holds the presidency of the G-7, convened a meeting of the group’s finance ministers on Friday to “discuss further measures to increase pressure on Russia and limit their war machinery,” according to a statement.
A lack of developments on the sanctions front led traders to unwind bullish positioning going into the weekend amid speculation of whether Trump would follow through on the tariff threats.
Further limiting the rally, the International Energy Agency projected a record oil supply surplus next year. A more pessimistic report from the agency on Thursday followed a decision by the OPEC producer group to keep returning idled barrels to the market in October, albeit at a lower rate than previous hikes.
With WTI buffeted by the competing forces of geopolitical risks and bearish fundamentals, prices have been stuck in a band between roughly $62 and $67 a barrel since early August.
“Today’s narrative has shifted toward sanctions and supply risk rather than oversupply,” said Rebecca Babin, a senior energy trader at CIBC Private Wealth Group. “For now, we continue to go nowhere fast.”
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