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The Biden administration has urged Ukraine to stop drone attacks on Russian energy infrastructure, warning that the strikes risk provoking retaliation and driving up global oil prices. Financial Times reported Friday.
The United States has issued repeated warnings to senior Ukrainian officials State Security Service and Military Intelligence Directorate, according to the relationship.
The attacks have helped raise crude oil prices nearly 4% so far since March 12, when Ukraine stepped up drone attacks on Russian refineries and other energy infrastructure.
The United States is also said to be concerned that Russia may retaliate by targeting energy infrastructure that the West relies on, such as the CPC pipeline that carries oil from Kazakhstan through Russia to the global market, which Russia briefly shut down in 2022.
A Ukrainian deputy prime minister said Friday that Russian oil refineries are legitimate targets for his forces.
Ukraine has demonstrated its ability to target most oil infrastructure in western Russia, putting around 60% of the country’s oil exports at risk, experts said FT.
The US complaints come as President Biden faces a tough reelection campaign this year with gasoline prices rising, jumping nearly 15% year to date to ~$3.50/gal.
Benchmark crude oil prices remained little changed on the week: Nymex crude for May delivery (CL1:COM) for May closed -0.5% Friday and week unchanged at $80.63 a barrel, and May Brent crude (CO1:COM) for the beginning of the month ended -0.4% Friday and up 0.1% this week to $85.43/bbl.
ETFs: (NYSEARCA:USE), (BNO), (UCO), (SCO), (USL), (DBO), (DRIP), (GUSH), (NRGU), (USOI)
Russia’s average daily oil refining rate fell to its lowest weekly level in 10 months after a flurry of Ukrainian drone strikes, Bloomberg reported.
According to the report, Russian refineries processed 5.03 million bbl/day of crude oil in the period from March 14 to 20, which is more than 400,000 bbl/day below the average for the first 13 days of the month.
Citi analysts expect Russian oil production to rise in the coming years despite Western sanctions, OPEC+ production cuts and downside risks from Ukrainian attacks on Russian oil infrastructure.
“We believe the market underestimates the ability of the Russian oil industry to defy pessimistic expectations and thrive,” Citi said in an analysis this week.
The energy sector, as indicated by the Energy Select Sector SPDR ETF (XLE), has closed +0.8% for the week.
Top 10 Gains in Energy & Natural Resources Over the Past 5 Days: Aemetis (AMTX) +79.7%Summit Midstream Partners (SMLP) +46.3%Braskem (BAK) +26.7%Metamaterials (MMAT) +23.3%Distribution company (EDN) +22%Central Port (CEPU) +21.7%CVR Partners (UAN) +19.2%Greenfire Resources (GFR) +17.3%Southern Gas Transporter (TGS) +15.5%NET Power (NPWR) +14.7%.
Top 5 Declining Countries in Energy and Natural Resources in the Last 5 Days: Nuscale Power (SMR) -45.8%Hallador Energy (HNRG) -22.7%Contango Ore (CTGO) -15%.
Source: Barchart.com