Oil prices stabilize on weaker US dollar while investors weigh tighter Russian supply; Brent at $86/bbl

Oil prices steady on Tuesday, March 26 as investors took a more mixed view toward the loss of Russian oil refinery capacity after the recent Ukrainian drone attacks while a slightly weaker US dollar offered some support to prices.

The front-month Brent crude futures due to expire on March 28 were last 12 cents down at $86.63 a barrel while US West Texas Intermediate (WTI) crude futures was up 13 cents at $82.08. The more actively traded Brent futures for June were down 12 cents at $85.96, according to news agency Reuters.

Brent rose 1.5 per cent on Monday while WTI gained 1.6 per cent after Russia ordered companies to cut output in the second quarter to meet a nine million barrels per day (bpd) target to comply with the supply cut decisions taken by the Organization of Petroleum Exporting Countries (OPEC).

What’s impacting crude oil prices?

-Russia, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a series of recent attacks on its oil refineries by Ukraine and has mounted its own attacks on Ukrainian energy infrastructure. Russian oil refining capacity shut down by Ukrainian attacks has reached 14 per cent of the country’s total capacity, according to Reuters.

-Analysts said that gasoline is seeing the support of reduced availability to the global market from the curtailed Russian exports that has filtered through to the US. Analysts also expect a structural decline in Russian refinery runs and do not see them regaining 2023 levels even in the second half of this year.

-A slightly weaker US dollar offered some support to oil prices. A weaker dollar typically makes oil cheaper for oil buyers holding other currencies. OPEC is unlikely to make any oil output policy changes until a full ministerial gathering in June. Next week’s gathering of ministers is not expected to make any policy recommendations

-The rising geopolitical premiums as the Israel-Gaza conflict continues were also supportive of the uptick in prices. Iran-backed Houthi militants on Tuesday said they had mounted six attacks on ships in the Gulf of Aden and the Red Sea over the past 72 hours, according to Reuters.