Oil prices are rising as the conflict in Ukraine raises supply concerns

Models of oil barrels and pump jacks are shown in front of the chart of growing stocks and “$ 100” in this illustration, made on February 24, 2022. REUTERS / Dado Ruvic / Illustration

March 1 – Oil prices rose on Tuesday as fears of potential supply disruptions over Russia’s invasion of Ukraine outweighed talks on a coordinated global release of commodities to calm markets.

Crude Brent May futures, which began trading immediately on Tuesday, rose 1.8 percent to $ 99.7 at 07:34 GMT after briefly hit $ 100. The figure reached a seven-year high of $ 105.79 since Russia’s invasion of Ukraine began last week.

April US West Texas Intermediate (WTI) crude futures rose 1.6 percent to $ 97.28. This contract peaked at $ 99.10 a barrel the day before and settled more than 4%. Read more

Fears of supply cuts have boosted prices as peace talks between Russia and Ukraine ended on Monday with officials returning to the capitals for further consultations, suggesting a solution to the conflict is not inevitable. Read more

“Ukraine’s fragile situation and financial and energy sanctions against Russia will sustain the energy crisis and oil well above $ 100 a barrel in the short term and even higher if the conflict escalates further,” said Louise Dixon, a senior oil analyst at Rystad. Energy, in a note.

Major oil and gas companies, including BP and Shell, have announced plans to exit Russian operations and joint ventures. Read more

Buyers of Russian oil are facing difficulties in terms of payments and the availability of ships, as Western sanctions in response to the invasion of Ukraine are imposed. Read more

Meanwhile, Asian factories achieved a rapid recovery in February amid signs that the coronavirus pandemic was having a smaller impact on business, suggesting an increase in oil demand. Read more

However, market sentiment was supported by the United States and its allies, which discussed a coordinated release of raw material stocks to mitigate supply disruptions. The release could reach between 60 million and 70 million barrels, media reported. Read more

“This likely release is limiting the rise in oil prices for now,” analysts at the Commonwealth Bank of Australia said in a note.

The International Energy Agency (IEA) will hold an emergency ministerial meeting on Tuesday to discuss the role its members can play in stabilizing oil markets.

Russia, which calls its operations in Ukraine a “special operation”, exports about 4 to 5 million barrels a day of crude oil and 2 million to 3 million barrels a day of refined products.

The Organization of the Petroleum Exporting Countries (OPEC) and other producers – including Russia – will also meet on Wednesday and are expected to maintain a gradual increase in supplies.

Report by Liz Hampton in Denver and Muyu Sue in Beijing; Edited by Kenneth Maxwell

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