Oil at four-month high, but Russia export increase weighs

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Oil prices remained mostly stable on Tuesday, staying close to their four-month highs after breaking out of a period of range-bound trading last week. However, the possibility of growing exports from Russia weighed on prices, especially due to the recent attacks on Ukrainian refineries.


The Brent crude oil futures contract for May delivery was down by 15 cents to $86.74 per barrel at 0946 GMT, while U.S. West Texas Intermediate (WTI) prices declined by 9 cents to $82.07. The WTI April contract, set to expire on Wednesday, also fell by 9 cents to $82.63. Yesterday, both benchmarks reached their highest levels since November, driven by lower crude exports from Saudi Arabia and Iraq, as well as signs of stronger demand and economic growth in China and the United States.


According to UBS analyst Giovanni Staunovo, “Oil demand data surprising on the positive side and the extension of the voluntary OPEC+ cuts until the end of June have supported prices.” Staunovo also forecasted that “Brent will likely trade in a $80-90 per barrel range this year, with an end-June forecast of $86 per barrel.”

In Russia, exports are increasing due to the Ukrainian drone attacks on the country’s oil infrastructure, which is putting downward pressure on prices. JP Morgan analysts wrote in a note that “Attacks will likely reduce Russian crude runs by up to 300,000 barrels per day, in addition to scheduled maintenance closures,” and added that “Lower primary runs, however, would lead to higher crude oil exports.” Russia will raise its oil exports through its western ports in March by almost 200,000 barrels per day (bpd) against a monthly plan for 2.15 million bpd.


Prices are also being affected by uncertainty regarding how U.S. interest rates will progress ahead of this week’s Federal Reserve policy meeting. Suvro Sarkar, DBS Bank energy sector team leader, said in an email that “The market may be in consolidation mode awaiting signals on rate cuts from this week’s FOMC meeting,” and added that “Oil prices are already up quite a bit over the last two weeks, factoring in higher geopolitical risk premium after the attacks on Russian refineries.”

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