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Oil prices soar as conflict in Ukraine raises supply concerns

Oil prices soar as conflict in Ukraine raises supply concerns

Models of oil drums and a pump lever are shown in front of a stock spiraling graph and the “$100” in this illustration was taken on February 24, 2022. REUTERS/Dado Rovich/Illustration

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(Reuters) – Oil prices rose on Tuesday as fears of a possible supply disruption amid Russia’s invasion of Ukraine outweighed talk of a coordinated global release of crude stocks to calm markets.

May Brent crude futures, which began trading immediately on Tuesday, were up 0.9% at $98.88 by 0440 GMT. The index touched a seven-year high of $105.79 after the Russian invasion of Ukraine last week.

US West Texas Intermediate crude futures for April rose 0.8 percent to $96.5. The contract touched as high as $99.10 a barrel the previous day, and settled up more than 4%. Read more

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Fears of tight supplies sent prices higher as peace talks between Russia and Ukraine ended on Monday with officials returning to capitals for further consultations, indicating that a resolution to the conflict is not imminent. Read more

Louise Dixon, chief oil market analyst at Rystad Energy, wrote in a note.

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

Russian oil buyers are struggling with payments and the availability of ships as Western sanctions are imposed in response to the invasion of Ukraine. Read more

Meanwhile, Asian factories maintained a brisk recovery in February amid signs that the coronavirus pandemic was having less impact on business, indicating an increase in demand for oil. Read more

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However, market sentiment helped the US and its allies discuss a coordinated release of crude stocks to mitigate supply disruptions. The media reported that this release could amount to between 60 million and 70 million barrels. Read more

“This potential release limits the uptick in oil prices for the time being,” analysts at Commonwealth Bank of Australia wrote in a note.

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

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

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(Reporting by Liz Hampton in Denver and Muyu Shu in Beijing; Editing by Kenneth Maxwell

Our criteria: Thomson Reuters Trust Principles.