On a Friday in mid-November, a Ukrainian drone struck Russia's Black Sea port of Novorossiisk, and in the quiet arithmetic of global markets the ripple was immediate: crude prices climbed more than two percent as a pipeline of roughly two percent of the world's oil fell silent. It is one more chapter in a long war fought as much through energy routes as through front lines, where each strike tests how much of the world's supply can be held hostage to conflict. Beneath the price movement lies a slower question about whether these attacks are becoming a lasting feature of the market, and whether
Oil Climbs Over 2% as Drone Strike Halts Exports From Russia's Novorossiisk Port
Friday's drone attack injured three crew members of a vessel in port and damaged apartment blocks, according to Russian officials.
Eventually, they could hit something that causes lasting disruption.
Mark
Why did a single port move prices more than 2 percent?
Mimi
Because of its size. Industry sources say the paused exports equal 2.2 million barrels a day, about 2 percent of global supply, and Transneft stopped sending crude there.
Luke
Worth noting that figure comes from two unnamed industry sources speaking to Reuters. It's not an official tally.
Mark
And the damage on the ground?
Mimi
Russian officials say a ship, apartment blocks and an oil depot were hit, and three crew members were injured.
Luke
Again, that's Russian officials' account. The article doesn't give independent confirmation of the damage.
Mark
Is this a one-off?
Mimi
Analysts say no. UBS's Giovanni Staunovo says the attacks are more frequent and intense, and Ukraine also claimed hits on a Saratov refinery and an Engels fuel depot.
Luke
Those Saratov and Engels strikes are Ukraine's claims. And nobody can say yet how long Novorossiisk stays shut.
Mark
How do sanctions fit in?
Mimi
JPMorgan says 1.4 million barrels a day of Russian oil is sitting on tankers, and unloading could get harder after November 21.
Luke
That's one bank's estimate, and the outlook is a warning, not a measured result.
Der Puls
- A drone strike on the Novorossiisk oil hub has forced exports of about 2.2 million barrels a day to stop, and the market reacted at once.
- Brent rose to $64.39 and WTI to $60.09, as traders weighed how much supply the port's silence would remove.
- Transneft has halted crude deliveries to the terminal, leaving tankers and pipelines waiting for a restart date no one can yet name.
- Analysts warn the strikes are growing more intense and more frequent, raising the chance of damage that lasts well beyond a single attack.
- With US sanctions on Rosneft and Lukoil set to bite after November 21, unloading may slow further and push more Russian crude onto idle tankers.
On a Friday in mid-November, a Ukrainian drone struck Russia's Black Sea port of Novorossiisk, and in the quiet arithmetic of global markets the ripple was immediate: crude prices climbed more than two percent as a pipeline of roughly two percent of the world's oil fell silent. It is one more chapter in a long war fought as much through energy routes as through front lines, where each strike tests how much of the world's supply can be held hostage to conflict. Beneath the price movement lies a slower question about whether these attacks are becoming a lasting feature of the market, and whether sanctions set to tighten after November 21 will deepen the strain.
Oil prices closed Friday more than two percent higher after Russia's Black Sea port of Novorossiisk stopped exporting crude. A Ukrainian drone had struck an oil depot in the energy hub, and Russian officials said the attack also damaged a vessel in port, apartment blocks nearby, and left three crew members injured. Brent crude settled at $64.39 a barrel and West Texas Intermediate at $60.09, both up sharply on the day.
The halt is large. Industry sources told Reuters that the port had paused the equivalent of 2.2 million barrels a day, roughly 2 percent of global supply, and that the pipeline monopoly Transneft had suspended deliveries to the terminal. Analysts saw the strike as more damaging than earlier ones, and UBS's Giovanni Staunovo noted that the attacks are coming more often and with greater force. Investors are now asking whether such strikes will someday cause disruption that does not heal quickly.
The pressure is not only military. Washington has barred dealings with Rosneft and Lukoil after November 21, a move meant to push the Kremlin toward peace talks over Ukraine. JPMorgan estimates that about 1.4 million barrels a day of Russian oil has already piled up on tankers as unloading slows, and it warns that cargoes may become harder still to unload after the deadline.
The coming days will show how quickly Novorossiisk can resume exports, and what becomes of Russian cargoes once the sanctions deadline arrives.
Oil prices closed Friday more than 2 percent higher after Russia's Black Sea port of Novorossiisk stopped exporting crude, following a Ukrainian drone attack that hit an oil depot in the energy hub. Brent crude futures settled up $1.38, or 2.19 percent, at $64.39 a barrel. US West Texas Intermediate rose $1.40, or 2.39 percent, to $60.09.
Over the week, Brent gained 1.2 percent and WTI about 0.6 percent. Russian officials said the attack damaged a ship in the port, apartment blocks and the oil depot, and that three of the vessel's crew were injured.
The halt covers a large volume. Two industry sources told Reuters that the port paused exports equivalent to 2.2 million barrels per day, about 2 percent of global supply, and that the pipeline monopoly Transneft suspended crude deliveries to the outlet. Phil Flynn, a senior analyst at Price Futures Group, said the hit on the terminal was huge and seemed to have had a bigger impact than earlier attacks.
Analysts are focused on the pattern as much as the single strike. Giovanni Staunovo, a commodity analyst at UBS, said the intensity of the attacks has increased and that they are coming much more often. Eventually, he said, they could hit something that causes lasting disruption. Investors, he added, are trying to judge what the latest strikes mean for Russian supply over the longer term.
Novorossiisk was not the only target. Ukraine said it separately struck an oil refinery in Russia's Saratov region and a fuel storage facility in nearby Engels overnight.
Sanctions are adding pressure from another direction. The United States has banned deals with the Russian oil companies Lukoil and Rosneft after November 21, as part of an effort to bring the Kremlin to peace talks over Ukraine. JPMorgan said on Thursday that about 1.4 million barrels per day of Russian oil, almost a third of its seaborne export potential, has been added to stocks held on tankers as unloading slows under the sanctions. The bank warned that unloading cargoes could become much harder after the November 21 cut-off for oil supplied by the two companies.
On Friday, Britain issued a special licence allowing businesses to keep working with two Bulgarian subsidiaries of Lukoil, as the Bulgarian government took control of the assets.
In the United States, the number of rigs drilling for oil rose by 3 to 417 in the week to November 14, according to Baker Hughes.
What to watch next: how quickly Novorossiisk exports resume, and what happens to Russian cargoes once the November 21 sanctions deadline arrives.
Bemerkenswerte Zitate
The intensity of these attacks has increased; it's much more often. Eventually, they could hit something that causes lasting disruption.— Giovanni Staunovo, commodity analyst, UBS
The hit on that Russian terminal was huge and seems to have had a bigger impact than previous attacks.— Phil Flynn, senior analyst, Price Futures Group
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