Ukraine Crisis Stokes Oil Price Surge
TEHRAN (Tasnim) – Oil prices rose sharply as Russia’s decision to send soldiers into Crimea, a Ukrainian peninsula, raised the prospect of interruptions to supply of both crude and refined products.
Brent crude for April delivery rose to its highest level this year, at $111.16 a barrel on ICE Futures Europe, a rise of $2.09, or 1.9%, from Friday’s settlement, the Wall Street Journal reported.
US crude-oil futures were up at levels not seen since September 2013. The April contract on the New York Mercantile Exchange rose $1.47, or 1.4%, to $104.06 a barrel.
“According to the Russian ministry of energy, Russian oil production in February totaled 10.58 million barrels a day, only just below the January figure, which in turn was the highest volume achieved since the end of the Soviet Union,” Commerzbank analysts wrote in a note to clients.
Russia is the world’s largest oil producer.
“The lion’s share of the country’s 5 million barrels a day of oil exports go to Europe, so it is hardly surprising that Brent has risen in response to the conflict, even though the risk of actual delivery outages is small,” they said.
In the past, however, the reaction might have been greater, according to David Hufton at oil brokerage PVM.
“Markets are remarkably calm and buoyant in the face of such enormous uncertainties,” he wrote. The reason for the comparative calm is that the world is, fundamentally, well supplied with oil, Mr. Hufton said, though he also suggested the market might have learned better how to ride out storms.
“A few years ago such geopolitical tensions would have been reflected in an oil price spike even if there was no direct threat to oil supply. The market has perhaps moved on from such knee-jerk reactions,” he wrote.
It might still happen, he noted, not ruling out more sudden market moves in the coming days.
Adding to the general atmosphere of tension, North Korea Monday launched two missiles into the sea, its second missile-firing in the last few days.
But current tension-related hikes may be no more than a blip, suggested Andrey Kryuchenkov of VTB Capital.
“Once geopolitical fears in the Black Sea ease, we expect both benchmarks to weaken in early March on slowing refining demand,” he wrote.
Recently the ICE’s gas oil contract for April delivery was up $16.00 at $934.25 a metric ton, while Nymex gasoline for April delivery was up 391 points at $3.0165 a gallon.
