Oil prices held this week on worries about supply disruptions in Russia and the U.S., while the market awaited clarity on sanctions as Washington tries to broker a deal to end the war in Ukraine.
"The market is trying to make up its mind on three bullish drivers: Russia, Iran and OPEC," said BNP Paribas commodities strategist Aldo Spanjer. "People are trying to figure out the impact of announced and actual sanctions."
Drone attacks on Russian oil infrastructure are reducing supplies.
Russia said Caspian Pipeline Consortium (CPC) oil flows, a major route for crude exports from Kazakhstan, were reduced by 30-40% on Tuesday after a Ukrainian drone attack on a pumping station. A 30% cut would equate to the loss of 380,000 barrels per day of market supply, Reuters calculations show.
Russian President Vladimir Putin suggested the CPC attack might have been coordinated with Ukraine's Western allies.
In the U.S., freezing weather threatened oil supply, with the North Dakota Pipeline Authority estimating production in the state would decline by as much as 150,000 bpd.
There is also speculation that the Organisation of the Petroleum Exporting Countries (OPEC) and allies like Russia and Kazakhstan may decide to delay its planned supply increase in April, said IG market analyst Tony Sycamore.
U.S. President Donald Trump denounced Ukrainian President Volodymyr Zelenskiy as "a dictator without elections" on Wednesday and said he should move fast to secure peace.
However likely a U.S.-brokered peace deal between Russia and Ukraine may be, analysts at Goldman Sachs said any associated easing in sanctions against Russia is unlikely to bring a significant increase in oil flows.
"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," Goldman Sachs said in a report.
In the Middle East, Israel and Hamas will begin indirect negotiations on a second stage of the Gaza ceasefire deal, which could weigh on oil prices by reducing the risk of supply disruption.
Tariffs announced by the Trump administration could also dent oil prices by raising the cost of consumer goods, weakening the global economy and reducing fuel demand. Worries about European and Chinese demand are also helping keep prices in check.
Trump's initial policy proposals have raised concern at the Federal Reserve about higher inflation, with firms telling the U.S. central bank they generally expect to raise prices to pass through the cost of import tariffs.
The Fed uses higher interest rates to combat rising prices and inflation. So long as the Fed and other central banks keep interest rates higher for longer, borrowing costs will remain elevated, which can slow economic growth and demand for oil.
Therefore, fuel card prices are likely to remain at current levels as we head into the final week of February.
