Market Analysis

Oil Edges Up on Supply Fears in U.S. and Russia, Market Looks to Ukraine Peace Talks

Amos Simanungkalit · 19 Feb33.4K Views

Image Credit: Reuters

Oil prices edged higher on Wednesday due to concerns about potential supply disruptions in the U.S. and Russia, alongside uncertainty surrounding Ukraine peace talks.

Brent crude futures rose by 14 cents, or 0.2%, reaching $75.98 per barrel, potentially marking a third consecutive day of gains.

U.S. West Texas Intermediate (WTI) crude for March increased by 16 cents, or 0.2%, to $72.01, reflecting a 1.8% rise from Friday’s close after a public holiday on Monday. The more actively traded April contract gained 14 cents, or 0.2%, to $71.97.

Analysts pointed to several factors, including the impact of a Ukrainian drone attack on a Russian oil pumping station and concerns over cold weather in the U.S. potentially affecting supply. "The $70 mark has proven resilient, bolstered by the drone strike on Russian infrastructure and the cold weather threat in the U.S.," said Tony Sycamore from IG markets.

Russia reported that oil flows through the Caspian Pipeline Consortium (CPC), a major route for Kazakhstan’s crude exports, were reduced by 30%-40% following the attack. This cut could lead to a loss of up to 380,000 barrels per day, according to Reuters.

Additionally, colder weather is expected to impact U.S. oil production, with North Dakota’s output potentially decreasing by 150,000 barrels per day.

Meanwhile, U.S. President Donald Trump’s administration announced that it would resume talks with Russia about ending the Ukraine conflict, which could lead to the easing or removal of sanctions that have affected Russian oil shipments.

Goldman Sachs analysts noted that while a peace deal could ease sanctions, they don’t believe it will significantly increase Russian oil flows, citing constraints linked to Russia’s OPEC+ production targets.

Israel and Hamas are also set to begin indirect talks for a second stage of the Gaza ceasefire, adding further geopolitical tension to the mix.

However, Trump's announced tariffs on auto imports and semiconductors could negatively impact the economy, reduce fuel demand, and raise consumer product prices, adding further uncertainty.