Oil Rises on Caspian Pipeline Supply Disruption

Oil prices surged on Tuesday, February 18, 2025, as a drone attack on the Caspian Pipeline Consortium's (CPC) Kropotkinskaya pumping station in Russia's southern Krasnodar region disrupted oil flows from Kazakhstan. The attack, which was reportedly carried out by Ukraine, raised concerns about potential shortages and increased geopolitical risks in the global oil market.



The CPC, which operates the pipeline, announced that the attack had led to a decrease in their ability to transport oil from Kazakhstan to key markets worldwide. This disruption could have far-reaching consequences for the global energy market, potentially leading to price fluctuations and supply shortages. The attack comes as the administration of U.S. President Donald Trump and Russia prepare for initial talks in Saudi Arabia in the coming days, adding to the geopolitical tensions in the region.



The drone strike on the Kropotkinskaya station in Russia's southern Krasnodar region reduced shipments from Kazakhstan to world markets by Western firms including Chevron and Exxon Mobil, the Caspian Pipeline Consortium said on Monday. The Black Sea CPC Blend oil loading plan for February would remain unchanged, two sources familiar with the plan told Reuters.

The attack on the CPC pipeline could lead to a drop in Russian oil exports via the pipeline of up to one million barrels per day (bpd), or one per cent of global oil production. This disruption could have a significant impact on global energy markets, potentially tightening the global supply and pushing prices higher. Russia has warned of a drop in oil exports via the CPC pipeline of up to one million barrels per day (bpd), which accounts for about 1% of global oil production.

The potential ceasefire talks in the Russia-Ukraine war and trade war tension could drag the WTI lower. Last week, U.S. President Donald Trump ordered his administration to consider imposing reciprocal tariffs on numerous trading partners. The prospect of a global trade war might weigh on the WTI. Additionally, the potential ceasefire talks in the Russia-Ukraine war might cap the upside for the black gold in the near term.

OPEC+ producers are not considering delaying a series of monthly oil supply increases scheduled to begin in April, according to a Russian state media report. In December, OPEC had pushed back a plan to begin raising output to April, due to weak demand and rising supply outside the group.

In conclusion, the drone attack on the Caspian Pipeline Consortium's Kropotkinskaya pumping station has disrupted oil flows from Kazakhstan, raising concerns about potential shortages and increased geopolitical risks in the global oil market. The attack comes as the administration of U.S. President Donald Trump and Russia prepare for initial talks in Saudi Arabia in the coming days, adding to the geopolitical tensions in the region. The disruption could have a significant impact on global energy markets, potentially tightening the global supply and pushing prices higher. However, the potential ceasefire talks in the Russia-Ukraine war and trade war tension could drag the WTI lower, capping the upside for the black gold in the near term.