Oil Ekes Out Minimal Gains As Traders Undecided About Bullish Drivers

Meanwhile, data shows Russia adept at circumnavigating sanctions: File Image/Pixabay

With three bullish drivers to consider, oil traders on Wednesday expressed their uncertainty by causing minimal gains; however, two key benchmarks nonetheless enjoyed their highest closes since February 11.

Brent settled up 20 cents at $76.04 per barrel, while West Texas Intermediate settled up 40 cents at $72.25.

Aldo Spanjer, commodities strategist at BNP Paribas, said, "The market is trying to make up its mind on three bullish drivers: Russia, Iran and OPEC…..people are trying to figure out the impact of announced and actual sanctions."

Spanjer was first referring to the fact that drone strikes on the Kropotkinskaya station on the Caspian Pipeline Consortium pipeline in Russia's Krasnodar region wasreducing supplies on the order of 30-40 percent, or 380,000 barrels per day (bpd).

Potentially more supply reductions could come from the U.S.’s tough stance on Iran: U.S. treasury secretary Scott Bessent recently told media that Washington aims to slash Iranian oil exports (currently at around 1.6 million bpd) to 100,000 bpd.

Meanwhile, there was some speculation in market circles that the Organization of the Petroleum Exporting Countries (OPEC) may decide to delay its planned supply increase in April (which Spanjer believes will happen).

Warren Patterson and Ewa Manthey, commodity strategists at ING, stated in a note, "A delay could wipe out the surplus we expect for the market this year, which would leave prices better supported."

Yet another factor that would play into supply tightness is U.S. president Donald Trump’s attempt to bring about peace between Russia and Ukraine: as the peace talks commenced on Wednesday, analysts at Goldman Sachs said that even if Trump is successful and sanctions against the former Soviet Union are eased as a result, it would be unlikely to bring about a significant increase in oil flows.

They stated in a report, "We believe that Russian crude oil production is constrained by its OPEC+ 9 million bpd production target rather than current sanctions, which are affecting the destination but not the volume of oil exports."

Indeed, data from Bloomberg and Kpler released on Wednesday showed that crude exports from Russia’s main Pacific terminal remained strong as shippers and traders worked around a fresh round of U.S. curbs.