Oil prices hit nearly 3-week highs on supply fears amid deepening crisis in Ukraine

The chimneys of the Total Grandpuits oil refinery are seen just after sunset, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

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  • Brent futures up 1%, WTI up 0.9% at 0445 GMT
  • Libya suspends operations at El Feel oilfield due to protests
  • Oil drilling in the United States, production increases with energy prices

TOKYO, April 18 (Reuters) – Oil prices hit near three-week highs on Monday as fears over tight global supply grew, with the worsening crisis in Ukraine raising fears of tougher sanctions from the EU. West against the leading exporter, Russia.

Brent crude futures rose $1.09, or 1.0%, to $112.79 a barrel at 0445 GMT, after hitting their highest level since March 30 at $113.80 earlier. in the session.

US West Texas Intermediate futures rose $1.00, or 0.9%, to $107.95 a barrel, after hitting $108.55, the highest since March 30.

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Ahead of the Easter weekend holiday, both contracts gained more than 2.5% on Thursday after news that the European Union could phase out Russian oil imports.

EU governments said last week that the bloc’s executive was drafting proposals to ban Russian crude, but diplomats said Germany did not actively support an immediate embargo. Read more

The comments came before tensions grew in the Ukraine crisis over the weekend, with Ukrainian soldiers resisting a Russian ultimatum to lay down their arms in the pulverized port of Mariupol on Sunday. Moscow, which calls its actions in Ukraine a “special operation”, said its forces had almost completely taken over the city. Read more

“The continuation of the war between Russia and Ukraine with no sign of a ceasefire has fueled supply fears, especially as demand is expected to increase as driving season approaches in the United States. ‘northern hemisphere,’ said Chiyoki Chen, chief analyst at Sunward Trading.

The International Energy Agency had warned that around 3 million barrels per day (bpd) of Russian oil could be tied up from May due to sanctions or buyers willfully avoiding Russian shipments. Read more

Russian oil production continued to fall in April, falling 7.5% in the first half of the month from March, the Interfax news agency reported on Friday.

“The oil market is likely to remain on an uptrend this week with limited additional supply from major oil producers to offset reduced flow from Russia,” said Kazuhiko Saito, chief analyst at Fujitomi Securities Co Ltd.

“Soaring fuel oil prices in the United States were also behind the recent rally as expectations grew for a tighter U.S. oil market due to increased export demand to the United States. Europe.”

The Organization of the Petroleum Exporting Countries (OPEC) and its allies in a group known as OPEC+, which includes Russia, have pushed back against Western pressure to increase production at a faster rate as part of a previously agreed deal to boost supply.

An OPEC report last week showed OPEC output in March rose just 57,000 bpd to 28.56 million bpd, lagging the 253,000 bpd hike allowed by OPEC under the OPEC+ deal. Read more

To add to the pressure, Libya halted oil production from its El Feel oilfield on Sunday and two sources at the oil port of Zueitina said exports had been suspended there after protesters calling for the Prime Minister’s resignation. Tripoli-based minister Abdulhamid al-Dbeibah took control of the sites. Read more

U.S. oil production forecast, however, is revised upwards despite labor and supply chain constraints as higher prices further boost drilling and well completion activity, according to industry experts. Read more

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Reporting by Yuka Obayashi; Editing by Kenneth Maxwell

Our standards: The Thomson Reuters Trust Principles.

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