OIL prices strengthened on Monday (Feb 17) as an attack on an oil pipeline pumping station in the Caspian Sea slowed flows from Kazakhstan, while investors monitored developments of a possible Moscow-Kiev ceasefire agreement that could ease sanctions and increase global supplies.
The US dollar index, which hovered near a two-month low after weaker-than-expected US retail data for January, also boosted oil prices by making crude less expensive for non-US buyers.
Brent crude futures settled at US$75.22 a barrel, rising 48 US cents. US West Texas Intermediate crude rose 65 US cents to US$71.39 a barrel by 2.33 pm EST, and did not settle at its normal time due to the US Presidents’ Day holiday. The public holiday led to relatively muted trading volumes.
Crude prices received support after drones struck the Kropotkinskaya pipeline pumping station in Russia’s southern Krasnodar region, reducing oil flows from Kazakhstan to world markets by Western producers, including Chevron and ExxonMobil, the Caspian Pipeline Consortium (CPC) said on Monday.
The CPC, which is the station’s operator, called the attack an act of terrorism, but did not specify that Ukraine had sent the drones. An official at Ukraine’s security service, however, said Kyiv had hit the station and a nearby oil refinery using drones.
“Although those drone attacks so far had limited disruption impacts on Russian crude exports, the rising frequency of those attacks is a concern that at some point it triggers some supply risks,” UBS analyst Giovanni Staunovo said.
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The strikes came as the administration of US President Donald Trump and Russia prepare for initial talks in Saudi Arabia in the coming days.
European leaders held an emergency meeting in Paris on Monday following Trump’s announcement of a possible imminent sit-down with Russian President Vladimir Putin, with Britain saying it was prepared to send peacekeeping troops to back up a possible Ukraine peace deal.
“Should sanctions relief allow it, we believe Brent crude oil prices could drop between US$5 and US$10/bbl if Russian barrels suddenly do not need to make a long journey to India or China, and more supply is suddenly made available,” BofA analysts said in a note.
The prospect of a global trade war also kept oil prices from moving higher after Trump ordered commerce and economic officials last week to study reciprocal tariffs against countries that place tariffs on US goods.
Meanwhile, officials from Opec+, which brings together the Organization of the Petroleum Exporting Countries and allies including Russia, said the group does not plan to delay a series of monthly oil supply increases scheduled to begin in April, after Bloomberg News reported that the group was examining whether to postpone the hikes. REUTERS
