Global Oil Futures Soar After Ukraine Missile Attack On Key Russian Oil Port

A devastating cruise missile attack on Russia's major Black Sea oil port, Novorossisk caused global oil futures to rise significantly, suggesting that international markets are being impacted by the Ukrainian attacks. 

The attack was carried out by one of Ukraine's own cruise missile, the Neptune - most famous for its sinking of the Russian Black Sea fleet warship Moskva. The missile has since been modified for use on land targets with extended range and a more powerful warhead. JL

CNBC reports and Taras Safronov reports in Militarnyi:

Oil prices climbed more than 2% on Friday, boosted by supply fears after the Black Sea port of Novorossiisk halted oil exports following a Ukrainian attack that hit an oil depot in the major Russian energy hub. The port paused oil exports and oil pipeline monopoly Transneft suspended crude supplies to the outlet. The strike was carried out by Ukraine's "Long Neptune" cruise missile. The warhead of the updated missile reaches 260 kg, which is 110 kg more than in the anti-ship version. The flight range has increased significantly and now reaches 1,000 km in the Neptun-D version, compared to 280 km in the previous version.

Oil prices climbed more than 2% on Friday, boosted by supply fears after the Black Sea port of Novorossiisk halted oil exports following a Ukrainian drone attack that hit an oil depot in the major Russian energy hub.

Brent crude futures were up $1.45, or 2.3%, at $64.46 a barrel by 10:50 a.m. ET, while U.S. West Texas Intermediate crude advanced $1.53, or 2.61%, to $60.22 a barrel.

The contracts were more or less stable on the week. At those levels, Brent was heading for a weekly gain of around 0.7% and WTI a modest gain of 0.15%.

Friday’s attack damaged a ship in port, apartment blocks and an oil depot in Novorossiisk, injuring three of the vessel’s crew, Russian officials said.

The port paused oil exports and oil pipeline monopoly Transneft suspended crude supplies to the outlet, two industry sources told Reuters.

“The intensity of these attacks has increased, it’s much more often. Eventually they could hit something that causes lasting disruption,” said Giovanni Staunovo, commodity analyst at UBS.

The market is trying to assess the impact of the latest attacks and what this means for Russian supply longer term, he said.

Industry sources say crude oil shipments via Novorossiisk reached 3.22 million tonnes, or 761,000 barrels a day, in October, with a total of 1.794 million tonnes of oil products exported.

Investors are also watching the impact of Western sanctions on Russian oil supply and trade flows.

Britain on Friday issued a special licence allowing businesses to continue working with two Bulgarian subsidiaries of sanctioned Russian oil firm Lukoil, as the Bulgarian government seized control of the assets.

The U.S. imposed sanctions banning deals with Russian oil companies Lukoil and Rosneft after November 21 as part of efforts to bring the Kremlin to peace talks over Ukraine.

About 1.4 million barrels per day of Russia’s oil, or almost a third of seaborne export potential, has been added to stocks held on tankers as unloading slows due to the U.S. sanctions against Rosneft and Lukoil, JPMorgan said on Thursday.

Unloading cargoes could become much more challenging after the November 21 cut-off to receive oil supplied by the companies, the bank added. 

 

Ukrainian President Zelensky announced that last night Ukrainian soldiers successfully ‘Long Neptuns’ against designated targets on Russian territory.

According to him, this was a just response to the ongoing Russian terror, and Ukrainian missiles are showing increasingly tangible and precise results every month.

 

Last year, the Ukrainian Navy carried out more than 50 strikes on Russian targets using R-360 Neptun cruise missiles.

It was previously reported that the warhead mass of the updated missile reaches 260 kg, which is 110 kg more than in the anti-ship modification.

The flight range has increased significantly and now reaches approximately 1,000 km in the Neptun-D system version, compared to 280 km in the previous version. The missile’s dimensions have also been changed: its length is 6 meters without the booster, and the body diameter is 50 centimeters.

 

The navigation system enables flight over difficult terrain and following the route without satellite navigation, as well as targeting ground objects, although technical details are not disclosed.

It is likely that these were the missiles used on the night of 14 November during strikes on the Sheskharis oil terminal in Novorossiysk and on Russian air-defense positions, where witnesses recorded a series of explosions and large areas of fire.