Oil Prices Soar as Ukraine Destroys 40 Russian Warplanes in Drone Strikes

TLDR

Table of Contents

Oil prices jumped over 3% on Monday after OPEC+ kept July output increases at 411,000 barrels per day, unchanged from previous months
Ukraine’s drone attacks on four Russian military airports destroying 40+ warplanes added geopolitical pressure to oil markets
Both Brent crude and WTI futures had lost more than 1% the previous week before Monday’s rally
Kazakhstan informed OPEC it will not reduce oil production despite quota overage issues
Goldman Sachs and Morgan Stanley expect OPEC+ to continue monthly increases through August and October

Oil prices jumped sharply on Monday as two major factors combined to push crude higher. The OPEC+ producer group maintained its planned output increase while geopolitical tensions flared between Ukraine and Russia.

Brent crude futures climbed $2.28 to $65.06 per barrel, a gain of 3.63%. U.S. West Texas Intermediate crude rose $2.45 to $63.24, up 4.03% for the day.

The price surge came after both contracts had fallen more than 1% during the previous week. Oil traders had been watching closely for OPEC+ decisions on production levels.

OPEC+ Maintains Production Strategy

The Organization of Petroleum Exporting Countries and its allies decided Saturday to raise output by 411,000 barrels per day in July. This marks the third consecutive monthly increase of that exact amount.

Sources familiar with OPEC+ discussions had suggested the group might consider a larger increase. The maintained level came as OPEC+ works to regain market share and address quota violations by some members.

Oil traders said the 411,000 barrel increase had already been factored into futures prices. “Had they gone through with a surprise larger amount, then Monday’s price open would have been pretty ugly indeed,” wrote Onyx Capital Group analyst Harry Tchilinguirian.

Kazakhstan has told OPEC it does not plan to reduce oil production. This admission came despite the country producing above its assigned quota levels.

“Given the circumstances of a loss in market share and the almost too honest admission from Kazakhstan that it would not cut output, there does seem little choice,” said PVM analyst John Evans. Oil prices would need to drop to $58 per barrel to make Kazakhstan’s overproduction unprofitable, according to SEB’s chief commodities analyst Bjarne Schieldrop.

Geopolitical Tensions Add Pressure

Ukraine launched drone attacks on four Russian military airports, destroying more than 40 warplanes. These geopolitical developments added upward pressure to oil prices beyond the OPEC+ decision.

BREAKING: Over 40 ‼️‼️Russian warplanes reportedly hit in massive Ukrainian drone strike. Ukraine’s Security Service has launched a major drone operation, reportedly damaging more than 40 Russian aircraft — including A-50, Tu-95, and Tu-22M3 bombers. That’s over $2 billion in… pic.twitter.com/8iIdQq47yy
— Iuliia Mendel (@IuliiaMendel) June 1, 2025

Geopolitical shocks have historically triggered short-term oil price spikes. However, concerns about weakening global demand have kept prices from sustained rallies in recent periods.

The combination of production decisions and military tensions created a perfect storm for higher crude prices. Oil company shares reflected this optimism in early trading.

Chevron stock climbed 0.7% while Exxon Mobil rose 0.8% ahead of the U.S. market opening. These gains came as broader market futures pointed to a mixed open.

Goldman Sachs analysts expect OPEC+ to implement another 410,000 barrel per day increase in August. “Relatively tight spot oil fundamentals, beats in hard global activity data and seasonal summer support to oil demand suggest that the expected demand slowdown is unlikely to be sharp enough to stop raising production,” the bank stated.
Morgan Stanley analysts also predict 411,000 barrel additions each month through October, totaling 2.2 million barrels per day. “With this latest announcement, there is little sign that the pace of quota increases is slowing,” Morgan Stanley’s team said.

OPEC+ will meet again on July 6 to decide August production levels, with current fundamentals supporting continued increases.

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