Oil prices showed modest gains on Wednesday, reflecting market movement over potential supply challenges arising from geopolitical tensions and adverse weather conditions in key production zones.
As of 15:26 BKK time, Brent crude was trading at $76.28 per barrel, marking an increase of 0.58%. Meanwhile, U.S. West Texas Intermediate crude for March delivery edged up by 0.65% to $72.32 a barrel.
Market analysts indicate that the strategic $70 per barrel threshold has maintained its resilience. This is in part due to increased concerns after a drone attack on a Russian oil pumping station and potential cold weather disruptions in the U.S. impacting supply. Furthermore, speculation is rife that the OPEC+ alliance might reconsider its anticipated output boost planned for April, adding another layer of uncertainty to the mix.
Significantly reduced oil flow through the Caspian Pipeline Consortium—down by 30%-40% due to Ukrainian drone attacks—heightens these apprehensions. This reduction represents a substantial cut equivalent to 380,000 barrels per day leaving the market undersupplied, per Reuters’ estimations.
In the U.S., severe cold weather poses additional supply risks, with disruptions potentially leading to a production decline of up to 150,000 barrels per day in North Dakota, the nation’s third-largest oil-producing state, according to local pipeline authorities.
On the diplomatic front, U.S. President Donald Trump’s administration has consented to further discussions with Russia aimed at resolving the ongoing Ukraine conflict. A breakthrough in negotiations might lead to lifting some sanctions, potentially altering Russian oil flow dynamics. However, analysts at Goldman Sachs remain skeptical about a significant immediate impact on Russian oil outputs, attributing constraints more to OPEC+ targets than existing sanctions.
Concurrently, geopolitical negotiations involving Israel and Hamas over a Gaza ceasefire continue in a parallel bid for regional stability.
President Trump’s intentions to impose hefty tariffs on automotive, semiconductor, and pharmaceutical imports—estimated at 25%—could have broader economic implications. Such a move risks inflating consumer good prices, pressuring the economic landscape, and potentially dampening fuel demand.
