(Investing) – NEW YORK – Oil prices rose about 1% to a one-week high on Wednesday on worries about supply disruptions in Russia and the U.S., while the market awaits clarity on sanctions as the U.S. attempts to broker a deal to end the war in Ukraine.
Brent futures were up 65 cents, or 0.9%, at $76.49 a barrel by 10:38 a.m. EST (1538 GMT), while U.S. West Texas Intermediate (WTI) crude rose 89 cents, or 1.2%, to $72.74.
That puts both crude benchmarks on track for their highest closes since February 11.
“The market is trying to make up its mind on three bullish drivers: Russia, Iran and OPEC,” said BNP Paribas (OTC:BNPQY) commodities strategist Aldo Spanjer. “People are trying to figure out the impact of announced and actual sanctions.”
Drone attacks on Russian oil infrastructure are reducing supplies.
Russia said Caspian Pipeline Consortium (CPC) oil flows, a major route for crude exports from Kazakhstan, were reduced by 30-40% on Tuesday after a Ukrainian drone attack on a pumping station. A 30% cut would equate to the loss of 380,000 barrels per day of market supply, Reuters calculations show.
Russian President Vladimir Putin suggested the CPC attack might have been coordinated with Ukraine’s Western allies.
In the U.S., cold weather threatened oil supply, with the North Dakota Pipeline Authority estimating production in the state would decline by as much as 150,000 bpd.
“The psychologically important $70 level (for oil prices) appears to have held firm, aided by the Ukrainian drone attack on the Russian oil pumping station and fears that cold weather in the U.S. may curtail supply,” said IG market analyst Tony Sycamore.
“On top of that there is some speculation that OPEC+ may decide to delay its planned supply increase in April,” Sycamore added, referring to the Organization of the Petroleum Exporting Countries (OPEC) and allies like Russia and Kazakhstan.
BNP’s Spanjer expects the cartel to extend its output cuts.
However likely or not a U.S.-brokered peace deal between Russia and Ukraine may be, analysts at Goldman Sachs said any associated easing in sanctions against Russia is unlikely to bring a significant increase in oil flows.
“We believe that Russian crude oil production is constrained by its OPEC+ 9 million bpd production target rather than current sanctions, which are affecting the destination but not the volume of oil exports,” Goldman Sachs said in a report.
In the Middle East, Israel and Hamas will begin indirect negotiations on a second stage of the Gaza ceasefire deal, which could lead to an easing of oil prices as the risk of conflict-driven supply disruption declines.
Tariffs announced by the Trump administration could also weigh on oil prices by raising the cost of consumer goods, weakening the global economy and reducing fuel demand. Worries about European and Chinese demand are also helping keep prices in check.
The market is waiting for U.S. oil inventory data from the American Petroleum Institute (API) trade group later on Wednesday and the U.S. Energy Information Administration (EIA) on Thursday. [EIA/S] [API/S]
Those reports will come out one day later than usual due to the U.S. Presidents’ Day holiday on Monday.
Analysts forecast energy firms added about 2.2 million barrels of crude to U.S. stockpiles during the week ended February 14. If correct, that would be the first time energy firms added crude into storage for four weeks in a row since April 2024.
