Russian oil refineries face renewed Ukrainian strikes

After a pause of about two weeks, Ukraine has renewed its attacks on Russian oil refineries despite pressure from US President Donald Trump ahead of the US midterm elections, according to a report published by the Guardian on Sunday.

Over three successive nights beginning on 30 October, Ukrainian drones reportedly hit three Russian refineries. According to the source, the facilities targeted were Rosneft’s Novokuybyshevsk refinery in Samara, the Bashneft-Novoil plant in Ufa and LUKOIL’s NORSI refinery in Kstovo.

WTI Oil Explained

WTI Oil Serves as a Global Crude Benchmark

Among the crude oils traded internationally, WTI, short for West Texas Intermediate, is one of three major types alongside Brent and Dubai Crude. Its relatively low gravity and sulphur content earn it the descriptions “light” and “sweet”, respectively. Regarded as a high-quality oil, it is straightforward to refine. Produced in the United States, WTI is distributed through the Cushing hub, known as “The Pipeline Crossroads of the World”. Its role as an oil market benchmark means that WTI prices are regularly cited in media coverage.

Supply and Demand Drive WTI Oil Prices

Supply and demand underpin WTI oil prices, as they do those of all assets. Stronger global growth can lift demand, while weaker growth can have the reverse effect. Supply disruptions caused by political instability, wars or sanctions can also affect prices. Another significant influence comes from decisions made by OPEC, a group of major oil-producing countries. As oil is traded predominantly in US Dollars, the currency’s value also affects WTI crude prices: a weaker US Dollar can make oil more affordable, while a stronger dollar can do the opposite.

Inventory Reports Influence WTI Oil Prices

Weekly oil stock reports from the American Petroleum Institute (API) and the Energy Information Agency (EIA) affect WTI prices by revealing changes in the balance of supply and demand. A fall in inventories may signal stronger demand and lift oil prices. Conversely, rising stocks can point to increased supply and weigh on prices. The API releases its report each Tuesday, followed by the EIA the next day. The two sets of figures generally align, coming within 1% of one another 75% of the time. As the EIA is a government agency, its data is regarded as more reliable.

OPEC Production Decisions Affect WTI Oil Prices

At meetings held twice a year, the 12 oil-producing nations of OPEC (Organization of the Petroleum Exporting Countries) jointly set production quotas for their members. These decisions frequently influence WTI oil prices. Lower quotas can restrict supply and lift oil prices, whereas an increase in OPEC production has the reverse effect. The broader OPEC+ grouping brings in ten additional countries outside OPEC, with Russia the most notable among them.

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