Brent gains following Kazakh oil supply disruption

The front-month ICE Brent contract has gained $0.63/bbl on the day, to trade at $75.61/bbl at 09.00 GMT.

PHOTO: Oil barrels. Getty Images

Upward pressure:

Brent’s price climbed back above the $75/bbl mark due to supply disruption concerns, after Ukrainian drones hit a major Russian oil pumping station of a pipeline, temporarily disrupting crude oil flows from Kazakhstan.

Several drones struck PS Kropotkinskaya yesterday. That is the oil transportation facility of Russia-based pipeline operator Caspian Pipeline Consortium (CPC). The facility is located in the Kavkazsky district of southern Russia and has temporarily been shut due to the attacks, CPC said.

“The conduit was due to ship about 1.6mb/d [1.6 million b/d] this month and next,” ANZ Bank’s senior commodity strategist Daniel Hynes remarked. “This [news] offset some bearish factors [in the oil market],” he added.

CPC operates the pipeline, which runs from the Caspian coast in northwest Kazakhstan to the Novorossiysk port on Russia’s Black Sea coast. It transports over two-thirds of all oil exports from Kazakhstan, and crude from Russian oil fields, including those in the Caspian Region.

Downward pressure:

Oil exports from thesemi-autonomous Kurdistan region is expected to begin next week, Reuters quoted Iraq’s Oil Minister Hayan Abdel-Ghani as saying. This news has capped some of Brent’s price gains today.

A delegation from Iraq's oil ministry will discuss the mechanism with the regional government for restarting oil supply, Ghani said, adding that Baghdad would receive about 300,000 b/d from the Kurdish region.

“Oil prices are under pressure… with talk of a potential restart in oil exports from Iraq’s Kurdistan region,” two analysts from ING Bank noted.

By Aparupa Mazumder

Please get in touch with comments or additional info to news@engine.online