REUTERS, March 1 — Oil prices climbed 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.
May Brent crude futures, which began trading as prompt on Tuesday, advanced 0.9 per cent to US$98.88 by 0440 GMT. The benchmark touched a seven-year high of US$105.79 after Russia’s invasion of Ukraine began last week.
US West Texas Intermediate (WTI) April crude futures rose 0.8 per cent to US$96.5. That contract touched a high of US$99.10 a barrel the previous day and had settled 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 US$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 overpayments and vessel availability as Western sanctions in response to the invasion of Ukraine take hold.
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.
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 tally up to between 60 million and 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 oil markets.
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.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers — including Russia — will also meet on Wednesday and are anticipated to maintain a gradual increase in supplies.