Oil rises as Ukraine conflict stokes supply concerns

A U.S. military vehicle drives past an oil pump jack in the countryside of Syria’s northeastern city of Qamishli, Oct. 26, 2019. (AFP Photo)

SULAIMANI (ESTA) — Oil prices rose on Tuesday as concerns over potential supply disruption amid Russia’s invasion of Ukraine outweighed talk of a coordinated global release of crude stocks to calm markets.

Brent crude futures rose $1.69 to $99.66 a barrel at 0440 GMT. The benchmark touched a seven-year high of $105.79 after Russia’s invasion of Ukraine began last week.

U.S. West Texas Intermediate (WTI) crude futures were up $1.44 at $97.16 per barrel. The contract touched a high of $99.10 a barrel the previous day, and had settled up more than 4%.

Concerns over tightening supplies drove prices higher as peace talks between Russia and Ukraine on Monday ended with officials heading back to capitals for further conclusion, suggesting conflict resolution is not imminent.

“The fragile situation in Ukraine and financial and energy sanctions against Russia will keep the energy crisis stoked and oil well above $100 per barrel in the near-term and even higher if the conflict escalates further,” Reuters quoted Louise Dickson, senior oil market analyst from Rystad Energy, as saying.

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

Buyers of Russian oil are also facing difficulty over payments and vessel availability as Western sanctions in response to the invasion of Ukraine take hold, Reuters reported.

The market mood was still helped by the United States and allies discussing a coordinated release of crude stocks to mitigate supply disruption, according to Reuters. That release could tally between 60 million and 70 million barrels.

“That likely release is capping oil price rises for now,” Reuters quoted analysts for Commonwealth Bank of Australia as saying.

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