SINGAPORE/MUMBAI: Oil prices were broadly steady on Monday, as investors monitored developments over a possible Russia-Ukraine peace deal that could ease the sanctions that have disrupted energy flows, while a weaker dollar and reduced Caspian supply curbed any selling.
Brent crude futures edged up 12 cents to $74.86 a barrel at 1526 GMT, and US West Texas Intermediate crude rose 20 cents to $70.94 a barrel. “Should sanctions relief allow it, we believe Brent crude oil prices could drop between $5 and $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.
“Global refining margins could fall as well. While margins have been normalising since the Ukraine War started, they could go even lower under sanctions relief for diesel,” the analysts added. US President Donald Trump said on Sunday he believes he could meet very soon with Russian President Vladimir Putin to discuss ending the war in Ukraine. The US and Russia are preparing for initial talks in Saudi Arabia in the coming days.
The prospect of a global trade war also capped oil prices after Trump last week ordered commerce and economic officials to study reciprocal tariffs against countries that place tariffs on US goods. “Fundamentals still point to (oil) oversupply this year, with the market struggling to assess the potential magnitude of this due to the negative impacts of US tariffs on demand growth, coupled with the potential easing of Russian sanctions,” said Panmure Liberum analyst Ashley Kelty.
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 the group was examining whether to postpone the hikes.
Crude prices received some support from a weaker US dollar, making the dollar-denominated commodity cheaper to holders of other currencies, and from reduced oil flows via the Caspian Pipeline Consortium (CPC). The dollar index hovered near a two-month low after weaker-than-expected U.S retail data for January.
Oil flows via CPC were reduced after a drone struck the Kropotkinskaya pumping station in Russia’s southern Krasnodar region, CPC said in a statement. The CPC transports oil from Kazakhstan’s Tengiz field to the Russian port of Novorossiisk, while Ukraine has repeatedly targeted Russian energy infrastructure with drone strikes, including in the southern Krasnodar region.
“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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