Oil prices dipped on Tuesday following a Ukrainian drone strike on a Russian crude-pumping facility that disrupted supply from Kazakhstan. Reports indicating that OPEC+ is contemplating delaying its plans to restore output have further fueled supply concerns.
The prevailing cautious sentiment is also linked to renewed worries about oversupply, especially in light of potential peace negotiations between Russia and Ukraine.
At 09:38 ET (02:38 GMT), Brent Oil Futures declined by 0.2 percent to $75.10 per barrel, while Crude Oil WTI Futures set to expire in March increased by 0.7 percent to $71.17 per barrel. The WTI crude oil contract did not conclude at its usual time on Monday due to U.S. markets observing Presidents’ Day, a federal holiday that typically alters trading schedules.
Drones target a key Russian crude-pumping station
Prices were primarily influenced by supply-side worries after Ukrainian drones struck a significant Russian crude-pumping station, which is crucial for oil exports from Kazakhstan. This incident heightened fears of further disruptions to global supply chains, particularly as Russia continues to be a dominant player in the energy sector.
Market sentiment was also affected by reports that the Organization of the Petroleum Exporting Countries and its allies, collectively known as OPEC+, are deliberating on maintaining current production cuts beyond the first quarter of 2024. This strategy aims to stabilize prices amid uncertain global demand.
The cartel and its partners are considering postponing a planned series of monthly supply increases that were scheduled to commence in April, as reported by Bloomberg on Monday, citing delegates. However, Russian Deputy Prime Minister Alexander Novak stated that OPEC and its allies do not have such plans.
Read more: Oil prices steady at $74.76 as Trump tariffs loom, Russia-Ukraine peace talks emerge
U.S. tariff risks persist, Trump expected to meet Putin in Saudi Arabia
Caution in the market remains prevalent as concerns grow over potential new tariffs from U.S. President Donald Trump’s administration. The possibility of escalating trade tensions has raised alarms about a slowdown in global economic growth, which could negatively impact oil demand. Analysts have warned that additional tariffs might disrupt trade routes and hinder industrial activities, particularly in sectors heavily reliant on energy.
On Tuesday, the U.S. dollar also strengthened, reflecting a safe-haven appeal amid trade uncertainties. A stronger dollar generally puts pressure on oil prices, as it makes crude more expensive for holders of other currencies.
Markets were on edge in anticipation of a crucial meeting between U.S. President Donald Trump and his Russian counterpart in the coming days. Analysts have suggested that a peace agreement between Russia and Ukraine, along with a potential easing of sanctions on Russian energy, could significantly influence global oil supply dynamics. Nevertheless, robust near-term demand signals have continued to provide support for crude prices.
