Oil prices settled higher on Thursday as Russia attacked Ukraine with missiles and drones overnight, a development that has angered US President Donald Trump.
The price of Brent crude was up by 57 cents or 0.8 per cent to $68.62 per barrel during the session and the US West Texas Intermediate crude jumped by 45 cents or 0.7 per cent to $64.60 a barrel.
According to Reuters, Russia hit Ukraine with deadly missiles and drone strikes early on Thursday, killing at least 21 people in Kyiv. Meanwhile, the Ukrainian military said it used drones to hit two Russian oil refineries overnight.
There are expectations that President Trump will intensify pressure on both countries to finally reach a deal after he met with both leaders this month to avoid further attacks.
Traders are also watching for India’s response to pressure from the US to stop buying Russian oil, after Mr Trump doubled tariffs on imports from India to as much as 50 per cent on Wednesday.
Regardless, Russian oil exports to India are set to rise in September, defying the pressure from the US.
The biggest Indian state-owned refiners, including IndianOil and BPCL, had recently pulled out of spot purchases of Russian crude for cargoes loading in October, after the US announced an additional 25 per cent tariff on India over its imports of crude from Russia.
The overall 50 per cent tariff on Indian goods took effect on August 27.
Despite the hiked tariff, due to India’s continued purchases of Russian oil, Indian refiners are set to raise their imports by between 150,000 barrels per day and 300,000 barrels per day in September, or up by 10-20 per cent compared to August volumes.
Crude oil supply is also set to rise due to a plan by the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ to raise September output by 547,000 barrels per day.
Further pressuring oil prices, Russian crude supplies to Hungary and Slovakia through the Druzhba pipeline have restarted after an outage caused by a Ukrainian attack in Russia last week.
Market analysts noted that weaker demand and higher supply will cause oil inventories to rise in the coming weeks as traders braced for lower fuel demand after the US Labor Day long weekend.