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SINGAPORE: Oil prices rebounded on Friday as fears of Western sanctions disrupted Russian oil exports, outweighing the possibility of more Iranian supplies and reports of a nuclear plant fire in Ukraine.
Global stocks fell and oil prices rose on signs of an escalation in the Russia-Ukraine conflict after reports that a Ukrainian nuclear power plant was on fire after an attack by Russian troops.
Brent crude futures for May rose as high as $114.23 a barrel and were at $112.52 on Friday up $2.06. The contract fell 2.2% on Thursday. US West Texas Intermediate for April rose $2.37, or 2.2%, to $110.04 a barrel after touching a high of $112.84 earlier in the session. The contract fell 2.6% in the previous session.
Oil prices are set to post their strongest weekly gains since the middle of 2020, with WTI up 18% and Brent up 14% after hitting their highest in a decade this week. Oil is rising on fears that Western sanctions on Russia over the Ukraine conflict will disrupt shipments from Russia, which is the world’s biggest exporter of crude and oil products combined.
Trading activity for Russian crude oil slowed as buyers hesitate to make purchases because of the sanctions while there is growing pressure on US President Joe Biden to ban US imports of Russian oil.
More oil supplies could be added from a coordinated release of 60 million barrels of oil reserves by developed nations. Japan said on Friday it plans to release 7.5 million barrels of oil, although it’s a small fraction of its demand.
Prices swung in a $10 range on Thursday but settled lower for the first time in four sessions as investors focused on the revival of the Iran nuclear deal which is expected to boost Iranian oil exports and ease tight global supplies.
“Price gains linked to actual and perceived disruptions to Russian oil exports should more than offset any fall in prices from potentially more Iranian crude oil supply,” Commonwealth Bank of Australia analyst Vivek Dhar said in a note. Dhar expects Brent to average $110 a barrel in the second and third quarters of this year, adding it was plausible Brent futures could reach $150.
Talks on reviving the 2015 Iran nuclear deal appeared to be nearing a climax with talk of an imminent ministerial meeting as a UN report showed Iran is most of the way to amassing enough enriched uranium for one bomb.
