Oil prices rose after the North Atlantic Treaty Organization (NATO) promised a "robust" response to Russian incursions into its airspace, adding to concerns about Russian supply flows.

West Texas Intermediate (WTI) crude rose as much as 2.6% to trade near $64 per barrel, its biggest intraday gain in a week, after NATO said it would use all options, including military ones, to defend itself. U.S. Secretary of State Marco Rubio reaffirmed America's commitment to NATO, while the Russian government is evaluating a potential ban on diesel exports for some companies amid a spate of Ukrainian drone attacks on the country's oil refineries, including two recent overnight attacks on oil pipeline facilities.

"While the damage is currently unknown, it is clear that Ukraine is now focused on Russia's oil pipeline," said Dennis Kissler, senior vice president of trading at BOK Financial.

Russian flows have been in the spotlight over the past few weeks amid global efforts to pressure Moscow into peace in Ukraine by targeting its energy assets. President Donald Trump reiterated on Tuesday that the US is ready to impose strong tariffs on Russia, but added that such sanctions would only succeed in ending the war in Ukraine if European countries stopped buying Russian oil. This followed remarks from Canadian Prime Minister Mark Carney, who urged Western allies to increase secondary sanctions against countries still importing Moscow's supplies.

Ceiling the rally, Iraq may soon resume exports through Kurdistan after a two-year halt due to a payment dispute. That could allow about 230,000 barrels per day to return to the international market, according to people familiar with the matter.

The rapid return of crude oil production from the Organization of the Petroleum Exporting Countries and its allies, as well as increased production from outside the group, has led market observers, including the International Energy Agency, to warn that supply will outstrip demand by a record margin. (alg)

Source: Bloomberg