WTI rises above $71.50 due to supply disruptions from Kazakhstan
- WTI appreciates following a Ukrainian drone attack on a pipeline responsible for transporting approximately 1% of the global crude supply.
- The Ukrainian attack has led to reduced crude shipments from Kazakhstan, affecting Western firms such as Chevron and ExxonMobil.
- Traders closely watch developments in the ongoing Russia-Ukraine peace talks in Saudi Arabia.
West Texas Intermediate (WTI) crude Oil price continues its upward momentum for the second consecutive day, trading around $71.70 per barrel during European hours on Tuesday. The gains follow an attack by Ukrainian drones on a major pumping station of a pipeline in southern Russia, disrupting crude Oil flows from Kazakhstan.
According to Reuters, a senior Russian official confirmed on Tuesday that Ukrainian drones targeted a pipeline responsible for transporting approximately 1% of the global crude supply. He warned that the attack could impact global markets and affect US companies. The disruption has led to reduced crude shipments from Kazakhstan, affecting Western firms such as Chevron and ExxonMobil. The Caspian Pipeline Consortium (CPC) reported on Monday that the Kropotkinskaya station, a key crude Oil transportation facility in Russia’s southern Krasnodar region, was hit by multiple drones.
Traders are also closely watching developments in the Russia-Ukraine peace talks on Tuesday. US and Russian officials are meeting in Saudi Arabia to discuss potential resolutions to the three-year-long conflict in Ukraine and the possibility of restoring US-Russia relations. However, Ukraine, which is not participating in the talks, has made it clear that no agreement can be reached without its involvement. "As a sovereign nation, we simply cannot accept any agreements made without us," President Volodymyr Zelensky said last week.
Meanwhile, reports suggest that OPEC+ producers are not considering postponing the planned series of monthly oil supply increases set to begin in April. However, concerns over a potential global trade war—fueled by US President Donald Trump’s reciprocal tariffs—have limited further gains in Oil prices.
WTI Oil FAQs
WTI Oil is a type of Crude Oil sold on international markets. The WTI stands for West Texas Intermediate, one of three major types including Brent and Dubai Crude. WTI is also referred to as “light” and “sweet” because of its relatively low gravity and sulfur content respectively. It is considered a high quality Oil that is easily refined. It is sourced in the United States and distributed via the Cushing hub, which is considered “The Pipeline Crossroads of the World”. It is a benchmark for the Oil market and WTI price is frequently quoted in the media.
Like all assets, supply and demand are the key drivers of WTI Oil price. As such, global growth can be a driver of increased demand and vice versa for weak global growth. Political instability, wars, and sanctions can disrupt supply and impact prices. The decisions of OPEC, a group of major Oil-producing countries, is another key driver of price. The value of the US Dollar influences the price of WTI Crude Oil, since Oil is predominantly traded in US Dollars, thus a weaker US Dollar can make Oil more affordable and vice versa.
The weekly Oil inventory reports published by the American Petroleum Institute (API) and the Energy Information Agency (EIA) impact the price of WTI Oil. Changes in inventories reflect fluctuating supply and demand. If the data shows a drop in inventories it can indicate increased demand, pushing up Oil price. Higher inventories can reflect increased supply, pushing down prices. API’s report is published every Tuesday and EIA’s the day after. Their results are usually similar, falling within 1% of each other 75% of the time. The EIA data is considered more reliable, since it is a government agency.
OPEC (Organization of the Petroleum Exporting Countries) is a group of 12 Oil-producing nations who collectively decide production quotas for member countries at twice-yearly meetings. Their decisions often impact WTI Oil prices. When OPEC decides to lower quotas, it can tighten supply, pushing up Oil prices. When OPEC increases production, it has the opposite effect. OPEC+ refers to an expanded group that includes ten extra non-OPEC members, the most notable of which is Russia.
Author
Akhtar Faruqui
FXStreet
Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.
