On Wednesday, global crude oil benchmarks saw modest gains driven by concerns over tightening supply after two major Kazakh oilfields temporarily suspended output. Brent futures increased by 32 cents, or 0.5%, settling at $65.24 per barrel. Meanwhile, U.S. West Texas Intermediate crude gained 26 cents, or 0.4%, ending the day at $60.62 per barrel. These increments followed a 1.5% rise in both contracts during the previous trading session.
The recent halt originated as Kazakhstan’s Tengiz and Korolev oilfields ceased production on Sunday after encountering power distribution complications. This disruption curtailed export capacity temporarily, prompting market participants to reassess near-term supply availability. Additionally, the Kashagan oilfield, another significant producer in Kazakhstan, has redirected its output to domestic consumption due to functional bottlenecks at the Black Sea’s Caspian Pipeline Consortium (CPC) terminal. Four industry insiders revealed to Reuters that this shift follows substantial damage to the terminal's infrastructure caused by drone strikes.
Further complicating the situation, Tengiz Oil Company (TCO), which operates the Tengiz field, announced a force majeure declaration on crude deliveries via the CPC system, citing internal communication documents. Industry sources estimate that production at the Tengiz and Korolev sites may remain suspended for an additional seven to ten days, heightening concerns about supply deficits in the coming period.
In parallel, Venezuela’s oil export activity remains sluggish despite a $2 billion supply agreement with the United States. Vessel tracking and state oil company PDVSA documentation indicate that exports under this arrangement totaled approximately 7.8 million barrels as of Wednesday. This volume underscores the limited progress made by Venezuelan state-run operations to reverse prior output reductions, maintaining pressure on the country’s export capabilities.
On the domestic front in the U.S., preliminary estimates from a Reuters poll forecast an approximate 1.7 million barrel increase in crude oil and gasoline inventories last week. Conversely, distillate stockpiles are expected to have decreased. Adding to market analysis, the International Energy Agency revised upward its global oil demand growth forecast for 2026 in its latest monthly oil market report, signaling a potential tightening of supply-demand balance and a reduced market surplus for the current year.
However, the overarching oil market sentiment is tempered by escalating geopolitical frictions that raise concerns over potential economic slowdown due to trade tariffs. According to Giovanni Staunovo, analyst at UBS, these developments are generating risk-averse behavior among investors.
Market participants await key data releases this week, including the American Petroleum Institute’s weekly inventory update scheduled for Wednesday at 4:30 p.m. EST and the official government inventory numbers set for Thursday at 12 p.m. EST. These reports have experienced a slight scheduling shift owing to a U.S. federal holiday on Monday.