Oil prices slip as traders assess Ukraine drone strikes, Red Sea impact

The Charles Eddie, a crude oil tanker owned by Euronav SA, a Belgian shipping company, sails northbound on the Suez Canal in Ismailia, Egypt.

Dana Smillie | Bloomberg | Getty Images

Crude oil futures slipped Tuesday as traders assessed the impact of the wars in Eastern Europe and the Middle East on the supply picture.

The West Texas Intermediate contract for May fell 33 cents, or 0.4%, to settle at $81.62 a barrel. The Brent contract for May lost 50 cents, or 0.58%, to settle at $86.25 a barrel.

Oil Prices, Energy News and Analysis

Ukraine has escalated its drone strikes against Russian oil refineries, knocking an estimated 900,000 barrels per day of capacity offline, according to Goldman Sachs. The outages could take weeks to repair and, in some cases, there may be a permanent loss of capacity, the investment bank said.

The disruptions’ effect on crude prices will likely be mixed, with a decline in refinery demand bearish and a potential reduction in Russian oil exports bullish, Goldman noted.

The Red Sea crisis, meanwhile, has led to a build of 100 million barrels of oil on international waters as shipping companies redirect trade flows to avoid attacks by Houthi militants, according to the bank.

The Red Sea disruptions combined with Russian shipping frictions have given crude prices up to a $4 boost per barrel due to larger-than-expected draws from commercial stocks, according to Goldman.

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Source: CNBC