On February 17th, oil prices strengthened with Brent crude futures settling at $75.22 per barrel, up 48 cents, and U.S. West Texas Intermediate (WTI) rising 65 cents to $71.39 per barrel. One of the main reasons for the rise in oil prices was a drone attack on the Caspian oil pipeline, which affected the flow of oil exported from Kazakhstan. In addition, the market's focus on a potential ceasefire agreement between Russia and Ukraine also supported the oil prices.
The attack occurred at the Kropotkinskaya oil pump station in Russia's Krasnodar region, a crucial hub for the transportation of Kazakhstan's oil through the Caspian. The attack caused a slowdown in the oil flow supplied by Western companies like Chevron and ExxonMobil, contributing to the rise in oil prices. The operator of the Caspian oil pipeline stated that the attack was an act of terrorism. Although there was no direct accusation against Ukraine, Ukraine claimed responsibility for the attack using drones.
Meanwhile, the U.S. and Russia are set to hold preliminary talks in Saudi Arabia, which has attracted attention as it might pave the way for new developments in Russia-Ukraine ceasefire negotiations. If the two countries reach an agreement, it could lead to an easing of sanctions, thereby increasing global oil supply. Some analysts believe that if Russian crude can be directly supplied to European markets, it could bring more supply to the market, potentially causing Brent crude prices to fall by $5 to $10 per barrel.
Additionally, OPEC+—comprising the Organization of the Petroleum Exporting Countries and allies including Russia—announced plans to implement a monthly production increase starting in April, continuing to raise global oil supply levels despite the multiple uncertainties facing the global market.
U.S. retail data in January fell short of expectations, and the dollar index dropped to a two-month low, which also made oil prices cheaper for non-U.S. buyers, further supporting the rise in oil prices. Although it was a quiet day of trading due to the President's Day holiday in the U.S., oil price movements remained in focus.
