Geopolitical Risk and Supply Outages Underpin Oil Prices

Crude oil prices moved higher this week, supported by escalating geopolitical tensions.

The Russia-Ukraine conflict has intensified, with Ukraine using long-range missiles supplied by the U.S. and Britain to strike targets within Russian territory.

In response, Russia launched an intercontinental ballistic missile for the first time since the war began, raising fears of further escalation.

Market participants are closely monitoring the conflict for any potential threats to global energy supplies. While Russian oil exports have remained largely unaffected so far, the possibility of targeted attacks on energy infrastructure or new sanctions cannot be ruled out. These risks have introduced a price premium, as traders hedge against potential supply disruptions. Analysts warn that continued geopolitical instability could play a major role in shaping oil market sentiment.

China’s Oil Demand Weakness Puts a Lid on Gains

China’s weakening crude oil demand remains a key concern for traders. October crude imports dropped to 10.53 million barrels per day (bpd), a 2% decline from September levels, with refinery throughput also lower on a year-over-year basis. Independent refineries are operating at reduced capacity, with utilization rates hovering around 58.7%, a reflection of poor margins and tepid demand for refined products like gasoline and diesel.

Longer-term concerns about China’s oil demand are also growing. Structural changes, such as the rapid adoption.