Oil eases as Ukraine hints at concessions to Russia

By Bozorgmehr Sharafedin

LONDON (Reuters) -Oil eased on Monday from its highest in more than seven years as Ukraine hinted at possible concessions to Russia that could alleviate tensions between the two countries that Western governments say are on the brink of war.

Brent crude was down 60 cents, or 0.6%, at $93.84 a barrel by 1440 GMT after touching its highest since October 2014 at $96.16.

U.S. West Texas Intermediate (WTI) crude fell 47 cents, or 0.5%, to $92.63 after hitting $94.94, the loftiest since September 2014.

“Market participants are concerned that a conflict between Russia and Ukraine could disrupt supply,” said UBS commodities analyst Giovanni Staunovo.

He said the oil market is sensitive to any news of potential supply disruptions because oil inventories are low and producers’ spare capacity is expected to fall further.

Comments from the United States about an imminent attack by Russia on Ukraine have rattled global financial markets. [MKTS/GLOB]

Russia could invade Ukraine at any time and might create a surprise pretext for an attack, the United States said on Sunday. Moscow denies that it plans to invade and has accused the West of hysteria.

However, markets later cooled as Ukrainian Ambassador Vadym Prystaiko said Ukraine was prepared to make some concessions to Russia.

“If Russia invades Ukraine, crude oil and natural gas prices can be expected to surge significantly. In this case, Brent would probably exceed $100 per barrel,” said Commerzbank analyst Carsten Fritsch.

Supplies have been stretched as the Organization of the Petroleum Exporting Countries (OPEC) and its allies, a group known as OPEC+, have struggled to deliver monthly pledges to increase output by 400,000 barrels per day (bpd) until March.

“Oil prices are once again coming under tremendous upward pressure as OPEC+ missed its output targets by a high 900,000 barrels in January,” said Pratibha Thaker, the Economist Intelligence Unit’s editorial director for the Middle East and Africa.

International Energy Agency (IEA) chief Fatih Birol on Monday urged OPEC+ to close the gap between its words and its actions.

Investors are also watching talks between the United States and Iran to revive the 2015 nuclear deal.

The Iranian foreign minister on Monday said that Iran was “in a hurry” to reach a swift agreement with world powers in nuclear talks in Vienna, provided its national interests are protected.

“A nuclear deal between the United States and Iran could release 1.3 million barrels of supply, but this will not be sufficient to ease the supply constraints,” said Thaker.

(Reporting by Bozorgmehr Sharafedin in Lonodn and Florence Tan in SingaporeEditing by Barbara Lewis and David Goodman)

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

Dear Reader,

Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.

We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor