Oil prices rose on Monday as investors assessed the impact of Ukrainian drone attacks on Russian oil refineries and U.S. President Donald Trump's call for NATO countries to halt purchases of Russian oil.

Brent crude futures closed up 45 cents, or 0.67%, at $67.44 a barrel, while U.S. West Texas Intermediate crude closed up 61 cents, or 0.97%, at $63.30 a barrel.

The attack on Russian oil infrastructure and Trump's increasing pressure on buyers of Russian crude boosted oil prices on Monday, said Phil Flynn, senior analyst at Price Futures Group.

"Behind the scenes, there are a lot of concerns around heavy oil and tight diesel supplies, which is keeping the market supported," Flynn added. One of Russia's largest oil refineries, in the northwestern city of Kirishi, has shut down its main processing unit following the Ukrainian drone attack over the weekend, two industry sources said on Monday. Both crude oil contracts rose more than 1% last week as Ukraine escalated attacks on Russian oil infrastructure, including its largest oil export terminal, Primorsk.

Primorsk has the capacity to load about 1 million barrels of crude per day, while the Kirishi refinery processes about 355,000 barrels per day of Russian crude, equivalent to 6.4% of the country's total supply.

Trump said on Saturday that the US is ready to impose new energy sanctions on Russia, but only if all NATO countries stop buying Russian oil and implement similar measures.

Oil also received some support from strong refinery demand in China last month and a decline in US crude inventories, while weaker economic data from China weighed on prices, said UBS analyst Giovanni Staunovo.

Investors are awaiting the US Federal Reserve's interest rate decision at its September 16-17 meeting, where the bank is expected to ease monetary policy. Lower borrowing costs could boost fuel demand.

"The market is starting to price in the possibility of a more aggressive Fed rate cut, which would put pressure on the US dollar and boost oil prices," said Flynn of Price Futures Group. The US dollar weakened against other major currencies on Monday, which could boost crude oil demand as a weaker dollar makes oil cheaper for holders of other currencies.

Last week, weaker job creation data and rising inflation in the US raised concerns about economic growth in the world's largest economy and largest oil consumer. (alg)

Source: Reuters