Yesterday, oil prices eked out moderate gains, extending the streak of gains to four days. The US economy is on a hot-streak, and a strong jobs report maintained the upward momentum. While traders are primarily focused on the economy and vaccine rollouts, there’s also plenty of old school geopolitical risk to stoke concerns, too.
Saudi Arabia reportedly suffered yet another attack on its oil infrastructure yesterday, the second this week. Houthi rebels in Yemen claimed to have launched drones and eleven missiles, which were intercepted by Saudi Arabia before causing severe harm. On Sunday, the rebels claimed to have attacked a Saudi refinery, though the Saudi government did not confirm the attack. Last month, Saudi Arabia proposed a ceasefire to end the war in Yemen.
In other geopolitics, the top Air Force General in Europe commented that there’s a “low to medium” risk of Russia invading Ukraine in the coming weeks, following Russia stationing troops at Ukraine’s border. US intelligence shows more troops on the border since it annexed Crimea in 2014. Yesterday, the US added additional sanctions on Russia for a broad array of misdeeds, including aggression towards Ukraine and interference in the US election. The US and NATO, an organization founded primarily to counter the former Soviet Union, have promised to back Ukraine in a conflict.
For oil, a Ukraine-Russia conflict likely wouldn’t significantly impact oil production, since most of Russia’s production is a long distance away. Still, if conflict escalates and other powers are drawn in, there’s at least a chance of broader conflict impacting oil production. Ukraine is important to oil logistics, though – pipelines bring Russian oil and natural gas to European consumers. So a disruption could potentially be bullish for Europe (which, in turn, would ripple throughout the world).