Oil prices edged down on Thursday after the release of an industry report showing an increase in U.S. crude stockpiles. Tariff concerns also weighed on sentiment as crude prices fell from gains they made in the previous session on worries over supply disruptions in Russia.
Brent crude fell 0.41 percent to $75.73 per barrel as of 5:03 GMT, while West Texas Intermediate (WTI) crude lost 0.50 percent to $71.89 per barrel. Oil prices held near a one-week high on Wednesday.
Trade tariffs to impact oil demand
In addition to the higher U.S. inventories, import tariffs announced by the Trump administration could impact oil prices by raising the cost of consumer goods, weakening the global economy and reducing fuel demand. Concerns about European and Chinese demand also supported the decline in oil prices.
Investors are concerned about the global economic outlook as the U.S. president dismantles the nation’s free-trade structure with plans to impose 25 percent tariffs on car imports to the U.S. In the Middle East, further easing in geopolitical tensions could also weigh on oil prices by reducing the risk of further supply disruption.
U.S. crude stocks reportedly rise
U.S. crude stocks rose by 3.34 million barrels last week market sources said, citing American Petroleum Institute figures, on Wednesday. Gasoline inventories rose by 2.83 million barrels and distillate stocks fell by 2.69 million barrels.
Official oil inventory data from the U.S. Energy Information Administration (EIA) is due on Thursday. Both reports were delayed a day due to a U.S. holiday on Monday.
Analysts forecasted that about 2.2 million barrels of crude was added to U.S. stockpiles in the week ended on February 14. If this is the case, it would be the first time energy firms added crude into storage for four weeks in a row since April 2024.
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Disruptions in Russian oil flows limit losses
However, worries over other oil supply flow disruptions limited losses. This week, oil prices witnessed an increase after Ukrainian drone strikes targeted a crucial Russian crude-pumping station, leading to supply disruptions from Kazakhstan. This attack has reignited anxieties about potential further supply interruptions in a market that is already dealing with tight inventories.
Russia said the Caspian Pipeline Consortium oil flows, a major route for crude exports from Kazakhstan, fell by 30-40 percent on Tuesday after a Ukrainian drone attacked a pumping station. A 30 percent decline in supply equals the loss of around 380,000 barrels per day of market supply, Reuters calculations showed.
“Although not confirmed, there is a possibility that exports from Iraq’s Kurdistan region could resume this week,” said Vijay Valecha, chief investment officer, Century Financial.
Adding to the disruption worries, it was reported on Tuesday that loading operations at Russia’s Novorossiysk port on the Black Sea were halted due to a storm.
Compounding the market’s focus, high-ranking officials from the United States and Russia recently convened in Riyadh, Saudi Arabia, for initial discussions regarding the ongoing war in Ukraine. While these talks are still in the early stages, any advancements toward a peace agreement could potentially lead to the lifting of sanctions on Russian oil exports, which might increase global supply and place downward pressure on prices.
“Geopolitical tensions continue to govern oil prices as Trump attempts to secure a peace deal between Russia and Ukraine – with or without Kyiv’s involvement,” added Valecha.
