By Adedapo Adesanya
Oil prices settled lower on Tuesday as the market weighed the loss of Russian refinery capacity after recent Ukrainian attacks, with Brent crude losing 50 cents to trade at $86.25 a barrel, while the US West Texas Intermediate (WTI) crude fell by 33 cents to close at $81.62 per barrel.
Prices edged lower after Russia’s government ordered companies to cut output in the second quarter to meet a 9 million barrels per day target to comply with pledges to the Organisation of the Petroleum Exporting Countries and its allies (OPEC+).
Earlier this month, Russian Deputy Prime Minister Alexander Novak said that Russia would cut its oil output and exports by an additional 471,000 barrels per day in the second quarter.
Russia will reduce output by an extra 350,000 barrels per day in April, with exports will be cut from March levels by 121,000 barrels per day. In May, output will be cut by 400,000 barrels per day and exports by another 71,000 barrels per day. In June, all the additional cuts will be from oil output.
The country, among the top three global oil producers and one of the largest exporters of oil products, is also contending with a spate of recent attacks on its oil refineries by Ukraine.
Russian oil refining capacity shut down by the attacks has reached 14 per cent of the country’s total capacity.
Meanwhile, it has also mounted its attacks on Ukrainian energy infrastructure.
Also, a slightly weaker US Dollar offered some support to oil prices.
A weaker greenback typically makes oil cheaper for oil buyers holding other currencies as oil is priced in the Dollar.
Further, rising geopolitical premiums as the Israel-Gaza conflict continues were also set to sustain price levels. 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.
Reuters reported that the OPEC+ is unlikely to make any oil output policy changes until a full ministerial gathering in June.
According to sources, it was said that the 22-nation group is not expected to make any policy recommendations ahead of next week’s gathering of ministers.
According to the American Petroleum Institute (API) figures on Tuesday, US crude stocks rose by 9.3 million barrels in the week ended March 22.
Official government data from the Energy Information Administration (EIA) will be published later on Wednesday.