Oil steadies as markets weigh Russian supply woes

Oil prices were little changed on Tuesday as investors took a more mixed view toward the loss of Russian refinery capacity after recent Ukrainian attacks while a slightly weaker U.S. dollar offered some support.

Front-month Brent crude futures due to expire on Thursday were 11 cents down at $86.64 a barrel by 1415 GMT while U.S. West Texas Intermediate (WTI) crude futures was up 6 cents at $82.01.

The more actively traded Brent futures for June were down 4 cents at $86.04.

Brent rose 1.5% on Monday while WTI gained 1.6% after Russia’s government ordered companies to cut output in the second quarter to meet a 9 million barrels per day (bpd) target to comply with pledges to the OPEC+ consumer group.

Russia, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a spate of recent attacks on its oil refineries by Ukraine and has mounted its own attacks on Ukrainian energy infrastructure.

Russian oil refining capacity shut down by Ukrainian attacks has reached 14% of the country’s total capacity, Reuters calculations showed on Tuesday. FGE analysts expect a structural decline in Russian refinery runs and do not see them regaining 2023 levels even in the second half of this year, they wrote in a note. “The impact of refining disruptions on crude prices is mixed, with a bearish effect from the decline in refinery demand and a bullish effect from the potential reduction in Russia oil exports,” Goldman Sachs analysts said in a note.

Meanwhile, a slightly weaker U.S. dollar offered some support to oil prices. A weaker dollar typically makes oil cheaper for oil buyers holding other currencies.

Rising geopolitical premiums as the Israel-Gaza conflict continues were also supportive of prices. Iran-backed Houthi militants on Tuesday said they had mounted six attacks on ships in the Gulf of Aden and the Red Sea over the past 72 hours.