Oil prices surge on fears of Russian supply disruptions

June 27, 2023 (MLN): Oil prices rose on Tuesday amid supply concerns arising from political instability in Russia, one of the world's largest oil producers.

Brent crude is currently trading at $74.94 per barrel, up by 0.30% on the day.

While West Texas Intermediate crude (WTI) is trading at $70.08 per barrel, up by 0.82% on the day.

A clash between Moscow and Russian mercenary group Wagner was averted on Saturday after the heavily armed mercenaries withdrew from the southern Russian city of Rostov under a deal that halted their rapid advance on the capital, as Reuters reported.

Following this event, ANZ analysts said "This is likely to lead to a risk premium being applied to the oil price amid the risk of further civil unrest."

Market participants were monitoring the supply of the commodity after Saudi Arabia’s decision to slash oil output by another 1 million barrels per day from July.

Moreover, traders were also watching data on gasoline inventories in the United States ahead of the peak summer driving season.

"The American Automobile Association estimates 43m motorists will drive 50 miles or more from their homes this Independence Day weekend. That is 4% more than 2019," the ANZ analysts added.

Global gasoline demand grew by 365,000 bpd year on year, driven by strong U.S. gasoline data, with consumption at an eight-week high of 9.4m bpd in the week of June 17, JP Morgan analysts said in a note.

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