MELBOURNE: Oil prices jumped on Monday on escalating sanctions against Russia over its invasion of Ukraine, which in turn led President Vladimir Putin to put his country’s nuclear deterrent on high alert.
Brent jumped back above $100 a barrel, initially surging more than $7, as the nuclear alert and bank payment constraints heightened fears that oil shipments could be disrupted. Russia accounts for about 10% of global oil supply.
Brent crude futures were up $3.95, or 4%, at $101.88, after hitting a high of $105.07 a barrel in early trade. Last week the benchmark hit a more than seven-year high of $105.79 after Russia’s invasion of Ukraine began. The April Brent contract expires on Monday.
US West Texas Intermediate (WTI) crude futures were up $4.55, or 5%, at $96.14 a barrel, after hitting a high of $99.10 early in the day. WTI climbed to as much as $100.54 last week.
Putin raised the stakes on Sunday, ordering Russia’s “deterrence forces” which wield nuclear weapons onto high alert, citing aggressive statements by NATO leaders and the range of economic sanctions imposed on Russia by the West.
Escalating war came days ahead of a March 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC), Russia and allies, together called OPEC+. 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, according to a technical committee report reviewed by Reuters on Sunday. read more
Further underscoring how tight the market is, the data also showed stocks in the developed world falling to 62 million barrels below the 2015 to 2019 average by the end of the year. A separate report showed OPEC+ in January produced 972,000 bpd less than their agreed targets.
