Oil Prices Rise After Drone Attack on Russian Pipeline, Supply Outlook Limits Gains

Oil prices extended gains on Tuesday following a drone attack on a Russian oil pipeline pumping station, which disrupted crude flows from Kazakhstan. However, expectations of rising supply limited further price increases.

Brent crude futures climbed 0.6% to $75.66 per barrel by 10:14 GMT, while U.S. West Texas Intermediate (WTI) crude rose to $71.65 per barrel, marking a 91-cent increase from Friday’s close. There was no settlement for WTI on Monday due to the U.S. Presidents’ Day holiday.

Pipeline Attack Reduces Supply from Kazakhstan

A senior Russian official confirmed that Ukrainian drones targeted a Russian pipeline, affecting the transit of approximately 1% of global crude supply. According to Russian oil transport company Transneft, the attack could reduce Kazakh oil transit volumes by 30% and take up to two months to repair.

Despite this disruption, OPEC+ producers remain committed to planned supply increases. A Russian state media report indicated that the group has no plans to delay the scheduled oil production hikes set to begin in April.

In December, OPEC+ postponed its initial plan to raise output, citing weak demand and rising supply from non-OPEC producers. However, the group appears set to proceed with its original timeline.

Markets Await Russia-Ukraine Peace Talks

Traders are also closely watching U.S.-Russia discussions on the Ukraine conflict, which are set to take place in Saudi Arabia later on Tuesday. The outcome of these talks could have significant implications for geopolitical stability and energy markets.