Oil prices edged higher in Asian trading on Wednesday after gaining in the previous session, as supply disruption concerns following a Ukrainian drone attack on a Russian crude-pumping station continued to support markets.
Brent Oil Futures rose 0.3% to $76.04 per barrel as of 20:48 ET (01:48 GMT), while West Texas Intermediate (WTI) crude futures also gained 0.3% to $72.03 per barrel.
Supply disruption fears support prices, US-Russia talks in focus
Prices had risen in the previous session after Ukrainian drone strikes targeted a key Russian crude-pumping station, disrupting supply from Kazakhstan. The attack reignited fears of further supply disruptions in a market already grappling with tight inventories.
Russia reported that crude shipments via the Caspian Pipeline Consortium (CPC), a key export route for Kazakhstan’s oil, declined by 30% to 40% on Tuesday following the drone attack.
A Reuters estimate showed that a 30% reduction would remove approximately 380,000 barrels per day from global supply.
Another news that added to the disruption concerns emerged as loading operations at Russia’s Novorossiysk port on the Black Sea were halted due to a storm, Reuters reported on Tuesday citing sources.
Adding to the market’s focus, top officials from the U.S. and Russia met in Riyadh, Saudi Arabia, for a first round of talks over the war in Ukraine.
While the discussions are in the early stages, any progress toward a peace agreement could lead to the lifting of sanctions on Russian oil exports, potentially increasing global supply and weighing on prices.
US data in focus to gauge demand, rate outlook
Gains were capped by cautious sentiment ahead of key U.S. economic data and the Federal Reserve’s latest meeting minutes, which could provide clues on the outlook for oil demand and interest rates.
Markets are awaiting the release of U.S. Purchasing Managers’ Index (PMI) data later in the week, which will provide insights into the health of the world’s largest economy and its impact on oil demand.
Additionally, the Federal Open Market Committee (FOMC) meeting minutes, due later on Wednesday, will be closely scrutinized for clues on the U.S. interest rate outlook.
Higher interest rates could strengthen the dollar and pressure oil prices by making crude more expensive for holders of other currencies.
