Oil Prices Rise In Early Trade - What Is Driving Today's Gains?

Oil prices gained early on Tuesday as tensions rose over crude supplies, as the war in Ukraine continues to escalate.

Benchmark Brent crude prices rose 0.5% at $68.50 per barrel, while U.S. West Texas Intermediate prices gained 1.5% at $64.96 per barrel at 2.36 a.m. ET. The WTI contract did not trade on Monday due to the U.S. Labor Day holiday.

Retail sentiment on Stocktwits about the United States Oil Fund (USO) was in the 'neutral' territory at the time of writing.

The war in Ukraine has escalated in recent weeks despite efforts by the Trump administration to bring the sides to the negotiating table. Over the weekend, Kyiv amped up its attack on Russian refineries amid Russian attacks on its own energy infrastructure. Some parts of Russia have already been facing fuel shortages since August.

According to a Reuters News report, recent Ukrainian drone attacks shut down facilities accounting for at least 17% of Russia's oil processing capacity, or 1.1 million barrels per day.

On Monday, during an address at the Shanghai Cooperation Summit (SCO) in Tianjin, China, Russian President Vladimir Putin reportedly said that the war was“a result of a coup in Ukraine, which was supported and provoked by the West.” Separately, Ukrainian President Volodymyr Zelenskyy pledged to strike deep into Russian territories.

Separately, Trump said that it was too late for a trade deal with India despite the country allegedly promising almost zero tariffs on U.S. goods. India currently faces a steep tariff of 50% on its exports to the U.S.

Investors will now wait keenly for the next meeting of the OPEC+ producer group on Sept. 7.  

“With the increase for September, completing the rollback of a 2.0 mmbpd tranche of prior cuts and actual production lagging somewhat behind the uptrend in targets, we think there's a case to be made for a pause,” noted analyst Tim Evans.

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