Oil near $100, at 7-year high as Russia-Ukraine tensions boost supply fears
Premium- Brent crude oil, the global benchmark, was up $3.48, or 3.7%, at $98.87
Oil prices have hit the highest in 8 years as tensions between between Russia and Ukraine escalated after Moscow ordered troops into two breakaway regions in eastern Ukraine.
Brent crude, the global benchmark, was up $3.48, or 3.7%, at $98.87 at 09:00 GMT, having earlier reached $99.38, the highest since September 2014.
US West Texas Intermediate (WTI) crude jumped $4.41, or 4.8%, to $95.48 versus Friday's settlement, having earlier reached $96, also the highest since 2014. The US market was closed on Monday for a public holiday.
The United States and its European allies are poised to announce new sanctions against Russia. Britain will immediately impose hard economic sanctions on Russia after President Vladimir Putin ordered the deployment of troops to two breakaway regions in eastern Ukraine, Prime Minister Boris Johnson said on Tuesday.
The sanctions, Johnson said, would be "targeted not just at entities in Donbass and Luhansk and Donetsk, but in Russia itself - targeting Russian economic interests as hard as we can."
"The potential for a rally over $100 a barrel has received an enormous boost," said Tamas Varga of oil broker PVM. "Those who have bet on such a move anticipated the escalation of the conflict."
European Union foreign ministers too will adopt sanctions Tuesday against Russia, the bloc's foreign policy chief Josep Borrell said.
The prices are nearing $100 a barrel with Ukraine tensions adding to the already surging oil market over tight supplies as demand recovers from the pandemic.
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Talks are ongoing on renewing Iran's nuclear agreement with world powers, which could eventually boost Iran's oil exports by over 1 million barrels per day.
The Organization of the Petroleum Exporting Countries and allies, known as OPEC+, have resisted calls to boost supply more rapidly.
"Crude’s rally is also challenged by signs of progress in talks to revive Iran’s nuclear deal which if achieved could pave way for higher supply from Iran. Indirect talks between Iran and the US were reaching a final stage while Iranian President Ebrahim Raisi said efforts to revive Iran's 2015 nuclear deal cannot succeed unless Washington lifts "major" sanctions. Also weighing on crude price is prospect of higher supply from US. US crude oil rig count has jumped to April 2020 highs reflecting higher production interest while some companies have boosted investment in the sector while US EIA is forecasting higher output from shale resources," said analysts at Kotak Securities.
Crude oil may remain volatile a market players react to every development relating to Russia-Ukraine standoff however we may not see much correction unless there are concrete efforts to dissuade tensions, they said.
(With inputs from Reuters)
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