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LONDON, March 1 (Reuters) – Oil prices jumped on Tuesday as concerns over supply disruptions following Russia’s invasion of Ukraine and related sanctions trumped talks of a coordinated release of global crude stocks.
May Brent futures rose $4.02, or 4.01%, to $101.99 a barrel at 1002 GMT. The benchmark hit a seven-year high of $105.79 after the invasion began last week.
U.S. West Texas Intermediate (WTI) April crude futures rose $3.24, or 3.38%, to $98.96. The contract hit a high of $99.10 a barrel the previous day, ending over 4%. Read more
A huge Russian military convoy approached the Ukrainian capital Kyiv on Tuesday after ceasefire talks between Russia and Ukraine broke down. Read more
Russia’s economic isolation has deepened as the world’s largest shipping company, Maersk, announced on Tuesday it would halt container shipping to and from Russia.
“The fragile situation in Ukraine and the financial and energy sanctions against Russia will keep the energy crisis fueled and oil well above $100 a barrel in the near term and even higher if the conflict escalates further,” Louise Dickson, senior oil market analyst at Rystad Energy, writes in a note.
Major oil and gas companies, including BP and Shell, have announced their intention to withdraw from Russian operations and joint ventures. Read more
Buyers of Russian oil are facing difficulties with payment and ship availability due to BP sanctions canceling fuel oil shipments from a Russian Black Sea port. Read more
Still, the market mood was helped by the United States and its allies discussing a coordinated release of crude inventories to ease supply disruptions. This release could reach 60 to 70 million barrels, media reported. Read more
“This release likely caps higher oil prices for now,” Commonwealth Bank of Australia analysts wrote in a note.
The International Energy Agency (IEA) is due to hold an extraordinary ministerial meeting on Tuesday to discuss the role its members can play in stabilizing the oil market.
Meanwhile, Asian factories saw a rapid recovery in February as signs indicate the coronavirus pandemic is having less of an impact on businesses, implying an increase in demand for oil. Read more
Russia, which describes its actions in Ukraine as a “special operation”, exports some 4 to 5 million barrels per day of crude oil, and 2 to 3 million barrels per day of refined products.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers – including Russia – will also meet on Wednesday and are expected to stick to a planned production increase for April.
Reporting by Liz Hampton in Denver and Muyu Xu in Beijing; edited by Kenneth Maxwell and Jason Neely
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