Oil prices soar on Russia nuclear alert, bank sanctions impact

An oil worker removes a thread cap from a piece of drill pipe on a drilling lease owned by Elevation Resources near Midland, Texas, U.S., February 12, 2019. (Reuters)

SULAIMANI (ESTA) — Oil prices edged higher on Monday on escalating sanctions against Russia over its invasion of Ukraine, which in turn led Russian President Vladimir Putin to put his country’s nuclear deterrent on high alert.

Brent crude futures jumped by $4.57 to $102.50 a barrel at 0605 GMT, after hitting a high of $105.07 in early trade.

Last week the benchmark hit a more than seven-year high of $105.79 after Russia’s invasion of Ukraine began.

U.S. West Texas Intermediate (WTI) crude futures were up $4.93 at $96.52 per barrel, after a high of $99.10 early in the day. WTI climbed to as much as $100.54 last week.

“Moves by the U.S. and Europe to remove certain Russian banks from the SWIFT system have raised fears of a disruption to supply of some sort in the near term,” Reuters quoted ANZ commodity strategist Daniel Hynes as saying.

“The risk to supply is the greatest we’ve seen for some time and it comes in a tight market,” he said.

Putin raised the stakes on Sunday, ordering Russia’s “deterrence forces” – which wield nuclear weapons – onto high alert, citing aggressive statements by NATO leaders and the range of economic sanctions imposed on Russia by the West.

“President Putin’s decision to put Russian nuclear forces on high alert is a clear and worrying escalation that can only be supportive for oil prices,” said Stephen Brennock of oil broker PVM, according to Reuters.

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