Crude Oil Market Plunges 3% as Middle East Risk Subsides

Brent futures depreciated by $2.05 or 2.68 per cent to $74.43 a barrel, and the US West Texas Intermediate (WTI) crude lost $2.08 or 2.87 per cent to trade at $70.40 a barrel.

For the week, Brent closed 0.4 per cent lower while the US crude futures posted a 0.5 per cent loss.

Market analysts reported that calm in the Middle East as the Gaza ceasefire held has reduced risk in the market.

Also, traders kept an eye on potential oil supply disruptions which capped some losses.

The market closely followed developments in the Russia-Ukraine conflict, where a Ukrainian drone attack on a Russia pumping station disrupted oil flows via the Caspian Pipeline Consortium (CPC).

This pipeline is a vital route for Kazakhstan’s crude exports, and the attack reduced oil flows by 30-40 per cent, potentially withdrawing up to 380,000 barrels per day from global supply.

However, Reuters reported that Kazakhstan has pumped record high oil volumes despite damage to its CPC export route via Russia.

In addition to the disruptions in Russia, extreme cold weather in the United States affected oil production.

North Dakota’s oil output was reduced by up to 150,000 barrels per day, contributing to tighter supply conditions.

On the Ukraine front, relations between Ukraine President Volodymyr Zelenskiy and US President Donald Trump deteriorated this week after the Ukranian leader criticised the US and Russian moves to negotiate a peace deal without its involvement.

The rift was widened by Trump comments blaming Ukraine for starting the three-year-old conflict.

Yet after a meeting with President Trump’s envoy for the Ukraine conflict on Thursday, President Zelenskiy said Ukraine was ready to work quickly to produce a strong agreement with the US on investments and security.

US inventories data offered mixed market signals as data from the US Energy Information Administration (EIA) and the American Petroleum Institute (API) provided a nuanced picture of market fundamentals.

According to the EIA, US crude oil inventories rose by 4.6 million barrels to 432.5 million barrels, remaining 3 per cent below the five-year average for this time of year. Gasoline inventories fell by 0.2 million barrels, while distillate stocks saw a larger draw of 2.1 million barrels, about 12 per cent below the five-year average.