OIL FUTURES: Crude prices rise on sharp US dollar selloff; market awaits geopolitical developments

Crude oil futures rose in midafternoon trading in Asia on Feb. 14 as geopolitical tensions simmered despite potential peace talks, alongside a sharp drop in the US dollar day over day.

At 4:08 pm Singapore time (0808 GMT), the ICE April Brent futures contract was up 38 cents/b (0.51%) day over day at $75.40/b, while the NYMEX March light sweet crude contract was up 29 cents/b (0.41%) from the previous close at $71.58/b.

"Oil prices were mostly stable following news of a potential 'peace deal' between Russia and Ukraine, which further softened supply-side pressures," Phillip Nova Senior Market Analyst Priyanka Sachdeva said.

President Donald Trump said late Feb. 13 that US and Russian officials would meet Feb. 14 at the Munich Security Conference, announcing the start of peace negotiations.

While the potential for peace talks eased supply-side concerns, the Ukrainian government expressed reservations about participating in the negotiations.

EU leaders were also spurned by being sidelined in the conversation, further worried after US Defense Secretary Pete Hegseth said Feb. 12 that the US would no longer serve as a guarantor of European security.

The uncertain outlook on geopolitical tensions has thrown a spanner in the crude oil complex, as investors grapple with the geoeconomic implications, particularly the potential imposition of tariffs.

"The prospect of a resolution to the conflict raised expectations of lifting sanctions on Russian oil, potentially increasing global supply and exerting downward pressure on prices," Sachdeva said.

However, Sachdeva added, "A higher-than-expected increase in the US CPI [Consumer Price Index] for January heightened concerns about inflation, influencing investor sentiment and contributing to the volatility in oil prices."

On a more stabilizing front, the US and India reached an agreement late Feb. 13 to resolve tariff disputes and improve trade relations, after Trump had previously criticized India's tariffs on US products as too high. Still, oil investors largely stayed on the sidelines, wary of potential reciprocal tariffs.

"If such tariffs are applied to major oil-exporting nations like India, it could lead to increased costs for imported oil, thereby raising oil prices," Sachdeva said.

The US, however, is planning to impose tit-for-tat tariffs globally, market analysts said.

"Studying tariffs case by case requires time, and the tariffs won't be effective until April. I don't know if you could call it good news, but the markets' reaction suggests that the latter has been perceived as good news and helped keep appetite afloat yesterday," Swissquote Bank Senior Analyst Ipek Ozkardeskaya said.

Meanwhile, the US dollar saw a sharp sell-off despite the escalating tariff war, Ozkardeskaya added.

The ICE US Dollar Index was at 103.250 as of 0730 GMT on Feb. 14, down 0.32% from the previous close. A weaker dollar makes dollar-denominated assets, such as oil futures, less expensive for investors holding foreign currencies, thereby boosting demand for these assets.

Dubai crude

Dubai crude swaps and intermonth spreads were higher in midafternoon trading in Asia on Feb. 14 from the previous close.

The April Dubai swap was pegged at $74.33/b at 2:00 pm Singapore time (0600 GMT), up $0.51/b (0.69%) from the previous Asian market close.

The March-April Dubai swap intermonth spread was pegged at 59 cents/b, widening 6 cents/b over the same period, and the April-May Dubai swap intermonth spread was pegged at 58 cents/b, widening 4 cents/b.

The April Brent-Dubai exchange of futures for swaps was pegged at $0.86/b, widening 1 cent/b day over day.