Oil prices climb as U.S. frost and Russian disruptions persist
Oil prices increased on Wednesday due to disruptions in oil supplies in the U.S. and Russia. Markets are awaiting details regarding peace talks on Ukraine, according to brokers.
A barrel of West Texas Intermediate crude for March delivery costs about $72 on the NYMEX in New York, up by 0.31%. Brent on ICE for April is priced at about $76 a barrel, after a rise of 0.25%.
Russia reported that the flow of oil through the Caspian Pipeline Consortium (CPC), the main oil export route from Kazakhstan, was reduced by 30-40% on Tuesday after a Ukrainian drone attack on a pumping station. According to Reuters calculations, a 30% reduction in flow would mean a loss of approximately 380,000 barrels per day of supply to the market.
On February 18, a team of CPC management and Western Consortium representatives was working at the station. The specialists' task is to prepare and carry out repair work as quickly as possible, in cooperation with contractors, to restore the functionality of all station facilities, as stated in a CPC consortium announcement.
The CPC Pipeline System is one of the major projects in the energy sector in the CIS. The length of the Tengiz – Novorossiysk pipeline is about 1,510 kilometres. This route transports more than two-thirds of all Kazakhstan's oil exports and crude from Russian oil fields, including the Caspian region. The CPC Marine Terminal is equipped with three Single Point Moorings (SPM) which enable safe loading of tankers at a significant distance from the shore.
Frosts threaten U.S. supplies
Simultaneously, frosts threatened oil supplies in the U.S. The North Dakota Pipeline Authority estimated that production in the state could drop by up to 150,000 barrels per day due to the cold.
The U.S. administration under President Donald Trump reported on Tuesday at 11:00 AM ET that it agreed to further talks with Russia about ending the conflict in Ukraine. An agreement could alleviate or help lift sanctions that have disrupted Russian oil supplies.
Trump enthusiastically referred to Tuesday's talks in Riyadh with participation from high-level U.S. and Russian delegations, stating that "he is much more confident" that Russia wants peace.
The U.S. president announced on Tuesday that he plans to impose tariffs on cars "around 25%" and similar tariffs on semiconductors and pharmaceutical imports. The tariffs could raise consumer product prices and decrease fuel demand.
