Oil prices jumped 5% to over $121 a barrel on Wednesday as a weather-related disruption to Russian and Kazakh crude exports via the Caspian Pipeline Consortium (CPC) pipeline added to worries over tight global supplies.
Brent crude futures were up $5.95, or 5.1%, at $121.43 a barrel as of 12:01 PM EDT (1501 GMT). US West Texas Intermediate (WTI) crude futures rose $5.24, or 4.8%, to $114.51 a barrel.
The CPC pipeline has been in the spotlight as the market is on edge over the ripple effect of heavy sanctions on Russia, the world’s second-largest crude exporter, after its invasion of Ukraine, which Moscow calls a “special military operation.”
Crude oil exports from Kazakhstan’s CPC terminal on Russia’s Black Sea coast stopped fully on Wednesday after damage caused by a major storm and continued bad weather, a port ship agent and the head of CPC said.
Russian Deputy Prime Minister Alexander Novak later said that oil supplies by the CPC may be completely stopped for up to two months.
The CPC pipeline carries around 1.2 million barrels per day of Kazakhstan’s main crude grade, which accounts for 1.2% of global demand.
“Prices are primarily rising on the loss of CPC Blend crude exports out of Novorossiisk …. adding further bullish fuel to the fire as the drop in Russian crude exports finally appears underway,” said Matt Smith, lead oil analyst for the Americas at Kpler.
US President Joe Biden is set to announce more Russian sanctions when he meets with European leaders on Thursday in Brussels, including an emergency meeting of NATO. Russia refers to the invasion, which is now a month old, as a “special operation.”
Published in The Express Tribune, March 24th, 2022.