Oil prices continued their volatile mid-morning on Tuesday, with Brent trading just above $73 per barrel—down $0.12 from yesterday’s close but up substantially from weekend levels.
WTI was trading down $0.14 per barrel on the day at just above $69.
Both benchmarks fell earlier in the day before rebounding slightly amid escalating tensions between Russia and Ukraine and a production outage at Johan Sverdrup.
On Monday, the war premium had returned to the oil markets after the Biden Administration handed Ukraine the green light to use U.S. long-range missiles to strike Russia. This—and the news that Norway’s Johan Sverdrup oilfield had halted production due to an onshore power outage—sent prices soaring.
Equinor quickly resumed at least partial production on Sverdrup, but all eyes were on the situation developing in Ukraine after it fired long-range missiles into a Russian region earlier in the day, according to Russia’s Ministry of Defense. Russia has warned that this constitutes a significant escalation, with Putin lowering the threshold for a nuclear strike and injecting jitters into the market.
Tuesday saw prices dip from their Monday spike before heading higher and eventually settling back to Monday levels.
The $73 price tag for Brent is still almost $10 per barrel under where prices were this time last year and $4 under where it started the year.
The U.S. dollar was also up on Tuesday at nearly its highest level in a year, while another persistent oil production outage at the Tengiz oilfield in Kazakhstan has resulted in a 30% decline in production for the field while repairs are completed.
The potential for further geopolitical fallout has traders cautious, with market participants closely monitoring any additional supply chain disruptions. Meanwhile, concerns about slowing demand growth and rising U.S. interest rates continue to weigh on market sentiment.
By Julianne Geiger for Oilprice.com
