Push for Higher Blending Targets: U.S. oil and biofuel groups, often at odds, jointly urged the Trump administration to increase renewable fuel blending volumes for 2026 and beyond, emphasizing the importance of liquid fuels in the economy. Their letter to EPA Administrator Lee Zeldin highlighted the need for steady biofuel targets to reflect growing investments in feedstocks and production capacity. This rare alliance stems from a shared opposition to electric vehicles, especially after Trump revoked Biden's order to push EV adoption. The groups also called for multi-year Renewable Fuel Standard (RFS) targets to provide market certainty, as the EPA had previously set volumes through 2025, reaching 22.33 billion gallons.

Kazakh Oil Output: Kazakhstan achieved record-high oil production of 2.12 million bpd on February 19, despite a significant reduction in capacity on its main export route, the Caspian Pipeline Consortium (CPC), due to a Ukrainian drone attack. The Tengiz oilfield, operated by Chevron-led Tengizchevroil, played a key role in this increase, with output rising to over 920,000 bpd. However, with CPC handling over 80% of Kazakhstan's exports, the 30-40% pipeline flow reduction—equating to 500,000-680,000 bpd—poses challenges for sustaining high exports. Russian President Vladimir Putin warned that the damage would impact global energy markets and be difficult to repair due to reliance on Western equipment.

Cold Weather Boosts U.S. Diesel: Frigid temperatures across the U.S. Northeast have driven a surge in heating oil demand, pushing distillate fuel consumption 9% above last year's levels and dropping inventories to their lowest seasonal level since 2014. Despite this temporary spike, long-term U.S. distillate demand remains on a downward trend due to declining industrial activity and the rise of renewable diesel, which grew to 240,000 barrels per day in 2024. U.S. diesel exports also surged by nearly 20% in January, further tightening domestic supply and boosting refining margins on the East Coast. However, with manufacturing contracting and the trucking industry slowing, distillate demand is expected to weaken in the coming months unless economic conditions shift significantly.

Market Overview: Oil prices remained mostly stable on Thursday after a recent rise, as a buildup in U.S. crude stockpiles pressured the market. U.S. crude inventories increased by 3.34 million barrels last week, according to American Petroleum Institute data. Supply disruptions in Kazakhstan and an OPEC+ production delay were balanced by concerns over global demand, keeping the market direction uncertain. A Ukraine drone attack reduced Caspian Pipeline Consortium oil flows by 30%-40%, equating to a supply loss of about 380,000 barrels per day. Meanwhile, potential restarts of oil flows from Iraq's Kurdistan region and concerns over U.S. trade tariffs impacting the global economy added further uncertainty to prices.

OPEC+ accounted for 47% of global crude oil production in 2024, with output reaching 35.7 million b/d. The group plans to increase production by 0.1 million b/d in 2025, following its agreed timeline, while phasing out voluntary cuts of 2.2 million b/d by September 2026. OPEC+’s share of global production is expected to decline to 46% in 2025 and 2026, down from 53% in 2016. Saudi Arabia, the largest OPEC producer, supplied 9.0 million b/d in 2024, a 13% decline from 2022. Russia led OPEC+ production with 9.2 million b/d, followed by Iraq (4.4 million b/d), the UAE (2.9 million b/d), and Kuwait (2.5 million b/d). 

Oil prices rose for the third consecutive day, supported by U.S. fuel inventory drawdowns and concerns over supply disruptions in Russia. WTI crude for March settled at $72.57 per barrel, while the April contract gained 0.35% to $72.50. U.S. crude stockpiles increased slightly more than expected, but gasoline and distillate inventories fell due to refinery maintenance. Russian attacks on Ukrainian gas infrastructure and reduced oil flows from Kazakhstan added to supply concerns, while potential Iraqi Kurdistan oil flow restarts could offset some risks. U.S. tariffs under Donald Trump’s administration may weaken the global economy, affecting fuel demand and keeping oil prices in check.