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Investing.com - Oil prices were choppy on Tuesday as traders gauged a drone attack on an oil pipeline in Russia that threatened supply flows from Kazakhstan, as well as key negotiations between the U.S. and Russia on halting the war in Ukraine.
A senior Russian official claimed that the pipeline was struck by Ukrainian drones and is responsible for pumping around 1% of global oil supply. The official flagged that the attack may disrupt worldwide crude flows and impact U.S. businesses.
However, the prospect of a Ukraine peace deal limited gains. Analysts have argued that an end to the hostilities could include a loosening of longstanding sanctions on Russia, reopening a raft of new oil supplies.
By 08:07 ET (13:07 GMT), the Brent futures contract had slipped by 0.2% to $75.10 a barrel, while U.S. crude futures (WTI) gained 0.6% to $71.11 per barrel.
U.S. tariff risks persist
The market remained cautious due to possible sweeping tariffs from U.S. President Donald Trump’s administration. Analysts have noted that a heavy flow of news around Trump’s levies since his return to the White House in January has somewhat abated in recent days, with attention focusing in on the Ukraine peace negotiations.
Still, the prospect of escalating trade tensions has exacerbated concerns around a possible slowdown in global economic growth, which could weigh on oil demand. Additional tariffs could disrupt trade flows and dampen industrial activity, particularly in energy-intensive sectors, analysts have also flagged.
The U.S. dollar strengthened on Tuesday, reflecting safe-haven demand amid the Ukraine talks and trade uncertainty. A stronger dollar typically pressures oil prices, as it makes crude more expensive for holders of other currencies.
Sentiment was also being swayed by reports that the Organization of the Petroleum Exporting Countries and its allies including Russia, known as OPEC+, are discussing maintaining current production cuts beyond the first quarter of 2025.
The cartel and its partners are weighing the possibility of delaying a planned series of monthly supply hikes set to begin in April, Bloomberg reported on Monday, citing delegates. However, Russian Deputy Prime Minister Alexander Novak said OPEC and its allies had no such plans.
(Ayushman Ojha contributed reporting.)