Oil prices rose more than 2% on Friday (November 14th) as the Russian port of Novorossiisk halted oil exports following a Ukrainian drone attack on an oil depot in the Russian energy hub, sparking supply concerns.

Brent crude futures closed up $1.38, or 2.19%, at $64.39 a barrel, while U.S. West Texas Intermediate crude settled up $1.40, or 2.39%, at $60.09 a barrel. Brent rose 1.2% for the week, and WTI posted a weekly gain of about 0.6%.

Friday's attack damaged a ship at the port, an apartment block, and an oil depot in Novorossiisk, injuring three crew members, Russian officials said.

"The attack on the Russian terminal was very large and appears to have had a greater impact than previous attacks," said Phil Flynn, senior analyst at Price Futures Group.

PORT EXPORTS 2% OF GLOBAL SUPPLY

The Russian port of Novorossiisk has halted oil exports, equivalent to 2.2 million barrels per day, or 2% of global supply, and oil pipeline monopoly Transneft has suspended crude supplies to the port, two industry sources told Reuters.

"The intensity of these attacks has increased; they are much more frequent. Ultimately, these attacks could hit something that causes long-term disruption," said Giovanni Staunovo, a commodities analyst at UBS.

Ukraine said on Friday that it separately attacked an oil refinery in Russia's Saratov region and a fuel storage facility in nearby Engels overnight.

Investors are trying to assess the impact of these latest attacks and what they mean for Russian supplies in the long term, he said.

Investors are also watching the impact of Western sanctions on Russian oil supplies and trade flows. Britain on Friday issued special permits allowing companies to continue working with two Bulgarian subsidiaries of sanctioned Russian oil company Lukoil, as the Bulgarian government takes over the assets.

The US imposed sanctions prohibiting deals with Russian oil companies Lukoil and Rosneft after November 21 as part of an effort to bring the Kremlin to peace talks regarding Ukraine.

About 1.4 million barrels per day of Russian oil, or nearly a third of its potential seaborne exports, have been added to stocks held on tankers as offloading slowed due to US sanctions on Rosneft and Lukoil, JPMorgan said on Thursday.

Unloading cargoes could become much more challenging after the November 21 deadline for receiving oil supplied by the two companies, the bank added.

Meanwhile, the number of oil drilling rigs in the United States rose by 3 to 417 in the week to November 14, according to data from oil services firm Baker Hughes on Friday. (alg)

Source: Reuters