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 consultation, suggesting conflict resolution is not imminent.
As concerns over potential supply disruptions after Russia’s invasion of Ukraine and related sanctions, oil prices on Tuesday surged outweighing talks of a coordinated global crude stocks release.
May Brent crude futures were up $3.04, or 3.1 per cent, to $101.01 a barrel by 0843 GMT. The benchmark touched a seven-year high of $105.79 after the invasion began last week, Reuters reported.
US West Texas Intermediate (WTI) April crude futures were up $2.56, or 2.67%, at $98.28. The contract touched a high of $99.10 a barrel the previous day, ending up more than 4 per cent.
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 consultation, 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,” wrote Louise Dickson, senior oil market analyst from Rystad Energy, in a note.
Major oil and gas companies, including BP and Shell, have announced plans to exit Russian operations and joint ventures.
Buyers of Russian oil are facing difficulty over payments and vessel availability as Western sanctions in response to the invasion of Ukraine take hold.
Still, the market mood was helped by the United States and allies discussing a coordinated release of crude stocks to mitigate supply disruption. That release could reach 60 million to 70 million barrels, media outlets reported.
“That likely release is capping oil price rises for now,” analysts for Commonwealth Bank of Australia wrote in a note.
The International Energy Agency (IEA) is set to hold an extraordinary ministerial meeting on Tuesday to discuss what role its members can play in stabilising the oil market.
Meanwhile, Asia’s factories sustained a brisk recovery in February amid signs the coronavirus pandemic was having less of an impact on business, implying an uptick in oil demand, Reuters reported.
Russia, which calls its actions in Ukraine a ‘special operation’, exports some 4 million to 5 million barrels per day of crude oil, and 2 million to 3 million barrels per day of refined products.