Oil Prices Jump as Ukraine Attacks Russian Facility
Oil prices jumped in the global commodity market as Ukraine launched heavy attack against Russian oil stations. The commodity prices adjusted due to concerns that cold weather in the US could disrupt production, while trade tariff concerns and uncertainty over US monetary policy continue to impact prices.
Brent crude traded at $75.95 per barrel while the American benchmark West Texas Intermediate (WTI) traded at $72.26 per barrel. Russian Deputy Prime Minister Alexander Novak announced that Ukraine launched an unmanned aerial vehicle (UAV) attack on an oil pumping station belonging to the Caspian Pipeline Consortium (CPC), which transports Kazakhstan’s oil, describing it as a ‘reaction to the US.’
While briefing Russian President Vladimir Putin in Moscow, Novak stated that the station’s capacity had dropped by 30-40% after the attack and warned that the repair process could take a long time. CPC said that oil supplies from Kazakhstan could decrease by 30% for about 45 to 60 days, resulting in a loss of 300,000 barrels per day (bpd) in global markets.
Novak emphasized that the oil transported on the line belongs to international partners such as Chevron and ExxonMobil, as well as some European companies. Novak stated that the attack was carried out in response to statements made at the Munich Security Conference, suggesting that Ukraine was likely reacting to the US’ planned negotiations.
Adding to global supply concerns, cold weather conditions in the US threaten output in the world’s biggest crude consumer. The North Dakota Pipeline Authority estimates that production in the country’s third largest oil-producing state could fall by up to 150,000 bpd.
Meanwhile, global oil markets experience volatility amid concerns that US President Donald Trump’s plans to increase import tariffs could deepen trade wars. Trump announced on Tuesday that he plans to impose a 25% tariff on automobiles and introduce similar tariffs on semiconductors and pharmaceutical imports.
These tariffs could increase the prices of consumer products, weaken the economy and reduce demand for fuel.
In addition, market players will closely monitor the minutes of the US Federal Reserve’s (Fed) monetary policy meeting. Experts state that the Fed is expected to follow a cautious monetary policy strategy.
On the other hand, the Trump administration announced an agreement with Russia to hold additional talks to end the war in Ukraine. Experts state that this agreement may help ease the sanctions that disrupt the flow of Russian oil shipments, potentially leading to a reduction in oil prices.
The oil market appears to have found some support with Brent edging higher yesterday, moving closer towards US$76 per barrel. There have been reports that OPEC+ may delay increasing supply to the market. The group’s members were set to gradually restore levels to 2.2 million barrels per day in April.
In a note, ING commodities strategist said concerns over the fragility of the market leaves OPEC+ reluctant to increase supply. “A delay could wipe out the surplus we expect for the market this year, which would leave prices better supported”, analyst said.
On top of OPEC+ supply uncertainties, there are concerns over Kazakh oil flows given the repair work needed at a pumping station in Russia damaged by a Ukrainian drone attack. It is estimated to take 2 months.
The Group of Seven is considering tightening the Russian oil price cap, currently set at US$60/bbl, to minimise Russia’s oil revenues. However, since its introduction, the price cap has had limited success. Russia has managed to circumvent it by building up its own tanker fleet.
“If recent US sanctions against a large share of the Russian shadow tanker fleet are effective, it would likely force Russian crude to use Western shipping services.
“That would ensure Russian crude trades at, or below, the current cap. This, however, would likely be short-lived as Russia and buyers will find ways around sanctions.”, ING said. #Oil Prices Jump as Ukraine Attacks Russian Facility DeepSeek Beats ChatGPT in AI, Rivals Stocks Plunge
