Oil steady as Russia-Ukraine peace deal may ease supply chain disruptions

Brent crude futures ticked up 5 cents, or 0.07 per cent to $74.79 a barrel at 1003 GMT, while US West Texas Intermediate crude was up 8 cents, or 0.11 per cent at $70.82 a barrel

Oil prices were broadly steady on Monday as investors monitored developments over a possible Russia-Ukraine peace deal that could increase global flows by easing sanctions, while reduced Caspian supply from a pumping station drone attack curbed any selling. 

Brent crude futures edged up 36 cents to $75.10 a barrel at 12:03 p.m. EST (1703 GMT). US West Texas Intermediate crude rose 45 cents to $71.19 a barrel, with trade expected to be relatively muted due to the Presidents Day public holiday in the United States. 

"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 believed 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. 

European leaders, meanwhile, held an emergency meeting in Paris following Trump's announcement of a sit-down with Putin, with Britain saying it was prepared to send peacekeeping troops to back up a possible Ukraine peace deal. 

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 after drones struck the Kropotkinskaya pipeline pumping station in Russia's southern Krasnodar region reduced oil flows from Kazakhstan to world markets by Western firms, including Chevron and Exxon Mobil, the Caspian Pipeline Consortium said Monday. 

The CPC, which is the station's operator, called the attack an act of terrorism, but did not specify that Ukraine had sent the drones.

"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. 

The dollar index, which hovered near a two-month low after weaker-than-expected U.S retail data for January, also boosted oil prices.

     

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