Oil Prices Hold Steady Amid Uncertainty Following Russian Supply Cuts

Oil prices showed little change on Tuesday following a rise in the previous session, as investors weighed mixed expectations amidst Russia’s supply cuts in response to recent Ukrainian attacks on Russian refineries. However, a slight decline in the dollar provided some support to the market.

In Monday’s session, Brent crude rose by 1.5 percent, while West Texas Intermediate crude increased by 1.6 percent. This followed Russia’s directive to its oil companies to reduce production to meet the Organization of the Petroleum Exporting Countries (OPEC) target of nine million barrels per day. Russia had been producing around 9.5 million barrels per day in late February.

The recent Ukrainian attacks on Russian refineries have disrupted production, with Goldman Sachs analysts estimating a reduction in production capacity of about 900,000 barrels per day. Some of these disruptions may be temporary, while others could be more prolonged, potentially lasting weeks or even resulting in permanent closures.

For example, after a Ukrainian drone attack on Saturday, Rosneft, a major Russian oil company, closed a crude oil production unit with a capacity of 70,000 barrels per day at its Kuibyshev refinery in Samara.

Oil prices received a slight boost from a decline in the dollar compared to the previous session. A weaker dollar typically reduces the cost of purchasing oil in other currencies, potentially stimulating overall demand for oil.

While the consequences of the Ukrainian attacks and Russian supply cuts are not yet fully clear, the oil market remains uncertain as investors monitor developments closely. The combination of geopolitical tensions and currency fluctuations continues to influence oil prices in the short term.