Oil prices soar as conflict in Ukraine fuels supply worries

Models of oil barrels and a pump jack are shown in front of a rising stock chart and “$100” in this illustration taken February 24, 2022. REUTERS/Dado Ruvic/Illustration

Join now for FREE unlimited access to Reuters.com

Register

LONDON, March 1 (Reuters) – Oil prices jumped on Tuesday as concerns over supply disruptions following Russia’s invasion of Ukraine and related sanctions trumped talks of a coordinated release of global crude stocks.

May Brent crude futures were up $4.58, or 4.67%, at $102.55 a barrel at 1331 GMT after hitting an intraday high of $104.60. The benchmark hit a seven-year high of $105.79 after the invasion began last week.

U.S. West Texas Intermediate (WTI) April crude futures rose $4.14, or 4.33%, to $99.86 a barrel after hitting their highest level since July 2014 at 101 $.53.

Join now for FREE unlimited access to Reuters.com

Register

A Russian armored column descended on the Ukrainian capital Kyiv on Tuesday after the deadly shelling of civilian areas in its second largest city. Read more

Russia said on Tuesday that its forces had cut off the Ukrainian army from the Sea of ​​Azov to the northern Black Sea.

Russia’s economic isolation has deepened as the world’s largest shipping company, Maersk (MAERSKb.CO), announced on Tuesday that it would halt the movement of containers to and from Russia. In the meantime, Britain has banned all ships with a connection to Russia from entering its ports. Read more

“The fragile situation in Ukraine and the financial and energy sanctions against Russia will keep the energy crisis fueled and oil well above $100 a barrel in the near term and even higher if the conflict escalates further,” Louise Dickson, senior oil market analyst at Rystad Energy, writes in a note.

Major oil and gas companies including BP and Shell have announced plans to exit Russian operations and joint ventures, while Total (TTEF.PA) said it would no longer invest capital in its Russian operations. Read more

Buyers of Russian oil are facing difficulties with payment and ship availability due to BP sanctions canceling fuel oil shipments from a Russian Black Sea port. Read more

Still, the market mood was helped by the United States and its allies discussing a coordinated release of crude inventories to ease supply disruptions. This release could reach 60 to 70 million barrels, media reported. Read more

“OPEC is likely to stick to its original plan of a monthly increase of 400,000 bpd, which won’t allay fears,” said Tamas Varga, analyst at PVM Oil Associates.

The Organization of the Petroleum Exporting Countries and other producers – including Russia – will meet on Wednesday.

“The United States is coordinating an additional release of SPR (Strategic Petroleum Reserve) and today the IEA Special Meeting is also expected to address the issue of energy security. These may provide short-term relief” , added Varga.

Members of the International Energy Agency (IEA) began an extraordinary ministerial meeting on Tuesday that could lead to a coordinated release of oil stocks to help cool oil prices. Read more

Meanwhile, Asian factories saw a rapid recovery in February as signs indicate the coronavirus pandemic is having less of an impact on businesses, implying an increase in demand for oil. Read more

Russia, which describes its actions in Ukraine as a “special operation”, exports some 4 to 5 million barrels per day of crude oil, and 2 to 3 million barrels per day of refined products.

Join now for FREE unlimited access to Reuters.com

Register

Reporting by Julia Payne in London and Muyu Xu in Beijing; edited by Jason Neely and Louise Heavens

Our standards: The Thomson Reuters Trust Principles.

Comments are closed.