Oil prices jumped 5 per cent to over $121 a barrel on Wednesday as a weather-related disruption to Russian and Kazakh crude exports via the Caspian Pipeline Consortium (CPC) pipeline added to worries over tight global supplies.

Brent crude futures were up $5.95, or 5.1 per cent, at $121.43 a barrel as of 12:01 pm EDT. US West Texas Intermediate (WTI) crude futures rose $5.24, or 4.8 per cent, to $114.51 a barrel.

The CPC pipeline has been in the spotlight as the market is on the edge over the ripple effect of heavy sanctions on Russia, the world’s second-largest crude exporter, after its invasion of Ukraine, which Moscow calls a “special military operation”.

Crude oil exports from Kazakhstan’s CPC terminal on Russia’s Black Sea coast stopped fully on Wednesday after damage caused by a major storm and continued bad weather, a port ship agent and the head of CPC said.

Russian deputy Prime Minister Alexander Novak later said oil supplies by the CPC may be completely stopped for up to two months.

The CPC pipeline carries 1.2 million barrels per day of Kazakhstan’s main crude grade, which accounts for 1.2 per cent of global demand.

“Prices are primarily rising on the loss of CPC Blend crude exports out of Novorossiisk ... adding further bullish fuel to the fire as the drop in Russian crude exports finally appears underway,” said Matt Smith, lead oil analyst for the Americas at Kpler.

Fuel price hiked again

Petrol and diesel prices on Wednesday were hiked by 80 paise a litre each for the second day in a row after an over four-and-half month election-related hiatus.

“Oil marketing companies holding back on retail price hikes following the conclusion of the elections was disappointing given the impact on margins, however, price hikes should provide some marginal respite if the trend sustains over the coming days,” said Kotak Institutional Equities.

Dipti Deshpande, principal economist at Crisil, said retail fuel prices of petrol and diesel have been kept unchanged since November 2021, whereas global crude oil prices rose by close to $30 per barrel during this period. “The pass through of rising crude oil prices is inevitable, and further hikes can also be expected.”

India is 85 per cent dependent on imports to meet its oil needs.