February 18, 2025 (Investorideas.com Newswire) Investorideas.com, a go-to platform for big investing ideas releases market commentary from Samer Hasn, Senior Market Analyst at XS.com.
Crude oil prices rose slightly by 0.1% this morning across both Brent and West Texas Intermediate crudes while remaining near the lowest levels this year.
Today's oil gains come after supply disruptions due to the hitting a Russian pipeline, which reduced flows from Kazakhstan.
Meanwhile, sources told Reuters that loading plans for February will not change despite a Russian official's talk that hitting the pipeline responsible for 1% of global supply will harm the global market and American companies.
The focus on the prospects of increasing global crude supplies is reducing the impact of this disruption. This supply hike may come in turn from the determination of the Organization of the Petroleum Exporting Countries and its ally Russia not to delay the scheduled date for raising production next April, and on the other hand from the hope of reaching an agreement to end the war in Ukraine.
Efforts to discuss a ceasefire agreement are accelerating with Russian and American officials meeting in Kingdom of Saudi Arabia. This meeting may also discuss trade issues. Therefore, the outgoing positive signals from this meeting, whether regarding ceasefire or the development of trade relations between the two poles, may be a negative factor for oil prices.
Bank of America expects that reaching an agreement between Russia and Ukraine may cause Brent crude prices to drop by $5 to $10 per barrel if Russian crude supplies are able to reach the markets more freely suddenly.
However, these negotiations may take a long time or may even fail, which may reduce the downward pressure on crude prices. Failure of the negotiations may result in maintaining sanctions on Russian oil exports as well.
In addition, the Middle East may return to the forefront again with the potential escalation between the United States and Israel on the one hand and Iran on the other. An official in the Iranian Revolutionary Guard confirmed yesterday that the next attack on Israel will be on time. Previous mutual attacks between Iran and Israel temporarily caused crude prices to rise suddenly, as they exacerbated concerns about targeting Iranian oil facilities.
I believe that the next potential round of escalation and the subsequent disruption in supplies will have a temporary and limited impact on prices. On the one hand, I do not believe that Iran and its allies have the ability to expand their escalation to include oil interests in the region, especially under the Donald Trump administration, and on the other hand, the restrictions that will be imposed on Iranian oil exports may not have a significant impact on the market. The International Energy Agency said in its February report that sanctions on Russia and Iran will have a long-term impact, while the oil market has shown resilience in the face major challenges in the past.
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