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Oil settles higher on Russian supply disruption

Published Feb 27, 2022 06:54PM ET Updated Feb 28, 2022 05:31PM ET
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© Reuters. FILE PHOTO: Models of oil barrels and a pump jack are displayed in front of Ukrainian and Russian flag colors in this illustration taken, February 24, 2022. REUTERS/Dado Ruvic/Illustration

 
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By Laura Sanicola

(Reuters) - Oil prices jumped on Monday as Western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports.

Brent crude settled up $3.06, or 3.1%, at $100.99 a barrel after touching a high of $105.07 in early trade.

The Brent contract for April delivery expires on Monday. The most active contract, for May delivery, was up $3.14 at $97.26.

U.S. West Texas Intermediate (WTI) crude settled up $4.13, or 4.5%, at $95.72 after hitting $99.10 in early trade.

"The tight global oil market could become even tighter following last week’s Russian invasion of Ukraine," said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illinois.

Russia is facing severe disruption to its exports of all commodities from oil to grains after Western nations imposed stiff sanctions on Moscow and cut off some Russian banks from the SWIFT international payment system.

"Russia could retaliate to these harsh measures by reducing or even completely suspending energy shipments to Europe," said Commerzbank (DE:CBKG) analyst Carsten Fritsch.

Russian crude oil grades, which account for about 10% of global oil supply, were hammered in physical markets.

Goldman Sachs (NYSE:GS) raised its one-month Brent price forecast to $115 a barrel from $95 previously.

"We expect the price of consumed commodities that Russia is a key producer of to rally from here - this includes oil," the bank said.

President Vladimir Putin put Russia's nuclear deterrent on high alert on Sunday.

Russian forces seized two small cities in southeastern Ukraine, the Interfax news agency said, but ran into stiff resistance elsewhere.

Talks between Ukraine and Russia have started at the Belarusian border, a Ukrainian presidential adviser said, aiming to agree to an immediate ceasefire.

"If there's any progress made in this meeting, we're going to see a sharp reversal in markets - we'll see stocks rise, the dollar rise and oil fall," said OANDA analyst Jeffrey Halley.

British oil major BP (NYSE:BP) Plc decided to exit its Russian oil and gas investments, opening a new front in the West's campaign to isolate Russia's economy. BP is Russia's biggest foreign investor.

The sanctions and the exodus of Western oil companies could impact Russian oil production in the near term, analysts said.

Oil prices came under pressure after the Wall Street Journal reported that the United States and other major oil-consuming nations are considering releasing 70 million barrels of oil from their emergency stockpiles.

The Organization of the Petroleum Exporting Countries (OPEC) and allies led by Russia, a group known as OPEC+, are due to meet on Wednesday. The group is expected to stick to plans to add 400,000 barrels per day (bpd) of supply in April.

Ahead of the meeting, OPEC+ revised down its forecast for the oil market surplus for 2022 by about 200,000 bpd to 1.1 million bpd, underscoring market tightness.

Oil settles higher on Russian supply disruption
 

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Comments (18)
bret again
bret again Feb 28, 2022 3:28PM ET
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crooks, like there isn’t enough supply without Russia. Some oil execs and big banks and “investors” should be called out by name for proffiteering and running up futures. scA-bs
Ernest Wong CA
Ernest Wong CA Feb 28, 2022 2:41PM ET
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this news is not an hour old, it's 5-6 hours old. Brent now just below $100
Hunt Richardson
Hunt Richardson Feb 28, 2022 1:04AM ET
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Putin is possessed by a demon. lost his mind. still sore about losing the Soviet Union
Marcus Bennett
Marcus Bennett Feb 28, 2022 1:04AM ET
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if putin is possessed then that means the liberals are the Devils works
Rogerio Soares
Rogerio Soares Feb 28, 2022 12:14AM ET
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Go Home NATO
Ac Tektrader
Ac Tektrader Feb 28, 2022 12:14AM ET
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we are home ..it's time for failing Russian dictatorship's armies to go home from their illegal brutal invasion .
Benoit Avril
Benoit Avril Feb 28, 2022 12:14AM ET
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Ukraine chose the west, live with it. They have known USSR, they have known Russia, but they want to be with us. There might be a reason don't you think?
Gregory Me
Gregory Me Feb 28, 2022 12:14AM ET
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Rogerio needs to be put into the ground.
Mad Max Monster
Mad Max Monster Feb 28, 2022 12:14AM ET
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Putin probably already knew the consequences beforehand he will just make strong ties with China and keep making threats about bombing Europe lol
Carson Chapin
Carson Chapin Feb 28, 2022 12:01AM ET
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I'm sadly going make a lot of money with all this volatility.
Benoit Avril
Benoit Avril Feb 28, 2022 12:01AM ET
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Good for you, you can send some of your profits to the Ukrainian army. I can't put a link in here.
Mad Max Monster
Mad Max Monster Feb 28, 2022 12:01AM ET
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who doesn't make profits in Krisis times lol
Bhagwan Dass
Bhagwan Dass Feb 27, 2022 11:17PM ET
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this war is for big profit of money
Hunt Richardson
Hunt Richardson Feb 27, 2022 11:17PM ET
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yep Russia making bank on higher oil and gas prices
Tom Swanson
Tom Swanson Feb 27, 2022 11:00PM ET
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Poutine thinks sanctions are an act of war?
Djuro Radujkovic
Djuro Radujkovic Feb 27, 2022 10:53PM ET
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Biden is evil man
Maximus Maximus
Maximus Maximus Feb 27, 2022 10:53PM ET
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Put away your keyboard and give up. Putin has already lost
Shep De
Shep De Feb 27, 2022 10:53PM ET
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Go crawl back into your commie hole ; Biden is OUR PRESIDENT
Brad Albright
Brad Albright Feb 27, 2022 10:53PM ET
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If you are under the impression that Biden is an evil man, may I suggest you consume some different information sources. Biden has integrity.
Honey Bee
Honey Bee Feb 27, 2022 10:28PM ET
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War helps US military industrial complex make huge profits. Keeping NATO membership open to Ukraine is the key ingredient to start a war. The elites will be making huge profits and they are the ones who are responsible for all the innocent life that are lost.
Roger Miller
Roger Miller Feb 27, 2022 10:13PM ET
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Hey Biden, was keeping NATO membership open to the Ukraine worth all this?
Brad Albright
Brad Albright Feb 27, 2022 10:13PM ET
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I see you lack the understanding of an important principle in western democracies: the right to self determination.
 
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