West Texas Intermediate (WTI), the U.S. crude oil benchmark, trades around $71.70 in early Asian session trading on Wednesday, extending its rally as supply concerns in Russia fuel price momentum.
Supply Concerns Drive Oil Prices Higher
WTI prices edged higher after Ukrainian drone strikes targeted a key Russian pipeline pumping station, disrupting crude exports from Kazakhstan. Russian Deputy Prime Minister Alexander Novak confirmed on Tuesday that oil flows through the pipeline had been reduced by 30-40%. According to Reuters estimates, a 30% reduction translates to a loss of approximately 380,000 barrels per day, intensifying global supply concerns.
Trade War Uncertainty Poses a Risk
Despite the bullish supply-driven momentum, investors remain cautious over trade policy developments under former U.S. President Donald Trump. Fears of a potential global trade war could cap further gains for crude oil.
Last week, Trump directed his administration to consider imposing reciprocal tariffs on major trading partners. On Tuesday, he indicated plans to impose a 25% tariff on foreign automobiles, with semiconductor chips and pharmaceuticals also facing higher duties. These measures, if implemented, could weigh on global economic growth and, in turn, dampen oil demand.
As geopolitical tensions and trade policy developments unfold, WTI remains volatile, with supply concerns currently supporting higher prices.
