Oil prices rose more than 3%, as rising civilian deaths in Ukraine increased pressure on European countries to impose sanctions on Russia’s energy sector.
see photosWorkers walk as oil pumps in the background in the Uzen oil and gas field
Oil prices jumped more than 3% on Monday, with investors worried about tight supplies as rising civilian deaths in Ukraine increased pressure on European countries to impose sanctions on Russia’s energy sector.
Global benchmark Brent crude jumped $3.14, or 3%, to $107.53 a barrel. US West Texas Intermediate crude was up $4.01, or 4%, at $103.28 a barrel. Trading was volatile with both contracts rising after a fall of more than $1.
German Chancellor Olaf Scholz said Russian President Vladimir Putin and his supporters would feel the “consequences” of the events in Buka outside the capital Kyiv, where a mass grave and closely tied bodies were found.
Western allies would agree on further sanctions against Moscow in the coming days, he said, although the timing and reach of the new package was unclear.
French President Emmanuel Macron suggested a ban on oil and coal, adding that there were “very clear clues pointing to war crimes” by the Russian military.
Since Russia’s February 24 invasion of Ukraine, sanctions and buyers evading Russian oil have already slashed production and raised fears of tighter supplies. [IEA/M]
“As the US and EU reduce purchases of Russian oil, this leaves China and India as the main customers and many refineries in those countries may be reluctant to buy Russian oil linked to negative public relations ,” said Andrew Lipo. President of Lipo Oil Associates in Houston.
Crude fell nearly 13% last week after President Joe Biden announced the release of record US oil reserves and members of the International Energy Agency committed to further exploiting the reserves. Brent crude last month touched $139, the highest level since 2008.
Saudi Arabia’s state oil producer Aramco raised its May official selling price in Asia for its flagship Arabian light crude, according to a pricing document seen by Reuters.
“This suggests that demand for oil is still very strong, and that doing so would deplete the supply of oil from the United States and tighten supply,” said Phil Flynn, an analyst at Price Futures Group.
Oil was supported by a break in talks in Vienna to revive the Iran nuclear deal, which would allow the lifting of sanctions on Iranian oil. Iran blamed the US for stopping.
A ceasefire in Yemen brought downward pressure, which could reduce the threat to supplies in the Middle East.
For the first time in seven years of conflict, the United Nations has signed a two-month deal between the Saudi-led coalition and the Houthi group aligned with Iran. Saudi oil facilities have come under Houthi attack during the fighting.
(Reporting by Stephanie Kelly in New York; Additional reporting by Alex Lawler in London and Florence Tan and Isabel Kua in Singapore; Editing by Margarita Choy, Mark Porter and David Gregorio)
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