Oil Prices Stay Elevated Amid OPEC+ Delay and Russian Uncertainty
Oil prices remain elevated amid speculation that OPEC+ may delay planned production increases and due to uncertainty surrounding Russian crude flows.
West Texas Intermediate (WTI) crude futures traded below $72 per barrel, maintaining gains of 1.6% so far this week. Brent crude futures closed near $76 per barrel.
OPEC+ is considering postponing a series of monthly supply increases scheduled to begin in April, which would mark the fourth delay if implemented.
High-level officials from the United States and Russia met in Riyadh, Saudi Arabia, for initial talks on the Ukraine conflict. However, the absence of Ukrainian President Volodymyr Zelenskyy has raised concerns in Europe and could potentially hamper an agreement.
Separately, the Group of Seven (G7) is exploring options to tighten the oil price cap imposed on Russian exports.
"The prospect of a further postponement of OPEC+ output restoration may provide support to prices," said Vishnu Varathan, head of economics and strategy at Mizuho Bank. "However, the broader outlook depends on non-OPEC production growth and pressure on OPEC+ to eventually resume supply increases."
Furthermore, oil flows from Kazakhstan to the Black Sea may decline by 30% while a critical Russian pumping station undergoes repairs following attacks by Ukrainian drones.
Despite recent volatility, oil prices have traded within a relatively tight range of around $5 per barrel this month. Implied volatility has also declined to near its lowest level since July.
Earlier in the year, futures prices surged due to frigid weather and tighter sanctions but later retreated following tariff announcements by former US President Donald Trump. Trump has indicated that he may impose 25% tariffs on imports of automobiles, semiconductors, and pharmaceuticals.
Additionally, Trump has placed Chevron's oil exports from Venezuela under review, highlighting ongoing tensions between the two countries that could potentially impact energy markets.