Global oil prices edged higher on Tuesday as rising geopolitical tensions and the prospect of U.S. monetary policy shifts weighed on investor sentiment.
Brent crude rose by 37 cents, or 0.54%, to trade at $68.52 a barrel as of 7:17 a.m. West Africa Time. U.S. benchmark West Texas Intermediate (WTI) crude saw a stronger uptick, jumping $1.01, or 1.58%, to $65.02 per barrel. Trading volumes were affected Monday due to the U.S. Labor Day holiday, during which WTI futures did not settle.
The uptick in prices follows heightened concerns about potential supply disruptions stemming from the ongoing conflict between Russia and Ukraine. According to estimates from Reuters, recent Ukrainian drone attacks have temporarily knocked out around 17% of Russia’s oil-processing capacity, roughly 1.1 million barrels per day. Ukrainian President Volodymyr Zelenskiy has vowed to continue launching strikes deeper into Russian territory, signaling a possible intensification of hostilities.
Three and a half years into the war, both nations have ramped up aerial offensives. While Moscow targets Ukraine’s energy and transportation networks, Kyiv has focused on Russian oil infrastructure, including refineries and pipelines.
Meanwhile, market attention is also fixed on the upcoming release of U.S. labor data, due later this week. Investors are watching closely to see whether the figures bolster the case for the Federal Reserve to begin cutting interest rates during its September meeting. July’s weaker-than-expected payroll numbers have already stirred speculation about a possible shift in monetary policy.
On the global stage, geopolitical dynamics are further complicated by China’s renewed push for a restructured world order. President Xi Jinping on Monday championed a new global economic and security framework favoring the “Global South,” in a direct counterpoint to U.S. dominance. His remarks came during a summit attended by leaders from Russia and India.
In terms of crude flows, China shipped approximately 600,000 barrels of heavy crude via tanker on Monday. Both China and India remain the largest importers of Russian oil, despite mounting Western pressure. While the United States has introduced fresh tariffs on India in response to its energy ties with Moscow, similar action has not yet been taken against China.
Market participants are also awaiting the upcoming OPEC+ meeting scheduled for September 7, where the alliance is expected to maintain current production levels. The group has gradually eased supply cuts over the past six months, and no major policy shifts are anticipated at this stage.
Despite recent geopolitical shocks, the International Energy Agency (IEA) notes that oil supply continues to outpace demand due in part to softening global economic indicators and ongoing trade tensions.
