Oil prices rose on Monday, November 18, after fighting between Russia and Ukraine escalated over the weekend, but concerns about weak fuel demand in China, the world's second-largest consumer, and expectations of a global supply surplus limited gains.
Brent crude futures rose 29 cents, or 0.41%, to $71.33 a barrel, while U.S. West Texas Intermediate (WTI) crude futures rose 17 cents, or 0.25%, to $67.19 a barrel.
Geopolitical impacts on oil prices:
Two US officials revealed that the Biden administration has allowed Ukraine to use US-made weapons to strike deep inside Russia, a major shift in US policy towards the conflict.
There was no immediate comment from the Kremlin, but it has previously warned that easing restrictions on the use of U.S. weapons would represent a dangerous escalation of the conflict.
“Biden giving Ukraine the green light to target Russian forces around Kursk with long-range missiles could escalate geopolitical tensions, weighing on oil prices, especially with reports that North Korean forces are joining the fight alongside Russia,” Tony Sycamore, a market analyst at IG, told Reuters.
In contrast, Russia on Sunday carried out its largest airstrike on Ukraine in nearly three months, causing extensive damage to Ukraine's energy infrastructure.
Russian oil refineries stop working
On the Russian side, at least three refineries have either stopped operations or cut production due to heavy losses caused by export restrictions, higher crude prices and increased borrowing costs, industry sources said.
Brent and WTI crude prices fell more than 3% last week, weighed down by weak economic data from China, as well as an International Energy Agency report that forecast global oil supply to exceed demand by more than 1 million barrels per day by 2025, even if OPEC+ cuts continue.
