NEW DELHI: Oil prices firmed on Thursday after Ukrainian attacks on Russia's oil infrastructure signalled potential supply constraints, and stalled peace talks tempered expectations of a deal restoring Russian oil flows to global markets. However, weak fundamentals kept gains limited.
Brent crude rose 41 cents, or 0.65%, to $63.08 at 0659 GMT, while US West Texas Intermediate rose 45 cents, or 0.76%, to $59.40.
Ukraine hit the Druzhba oil pipeline in Russia's central Tambov region, a Ukrainian military intelligence source said on Wednesday. This marked the fifth attack on the pipeline, which sends Russian oil to Hungary and Slovakia. The pipeline operator and Hungary's oil and gas company later stated that supplies were moving through the pipeline as normal.
"Ukraine’s drone campaign against Russian refining infrastructure has shifted into a more sustained and strategically coordinated phase," consultancy Kpler said in a research report. It added that strikes now target refineries in repeated cycles, aiming to prevent key assets from stabilising.
"This has pushed Russian refining throughput down to around 5 million barrels per day between September and November, a 335,000 bpd year-on-year decline, with gasoline hit hardest and gasoil output also materially weaker," the report noted.
The perception that progress on a peace plan for Ukraine was stalling also supported prices. This followed US President Donald Trump's representatives emerging from peace talks with the Kremlin without any specific breakthroughs on ending the war. Trump said it was unclear what happens now.
"Crude will likely remain stuck in a narrow range while the Ukraine peace efforts grind on," said Vandana Hari, founder of oil market analysis provider Vanda Insights.
Previously, expectations of an end to the war had pressured prices lower, as traders anticipated that a deal would involve lifting sanctions on Russia and allowing Russian oil back into an already oversupplied global market. — Reuters
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