LONDON: In response to new sanctions on Russia and the closure of Russian banks from a global payment system, oil prices rose sharply on Monday.
Crude oil prices gained $4.16 or 4.3 percent to $102.09 a barrel in early trading after touching a high of $105.07.
On Monday, the expiration of the Brent contract for April delivery will take place. Whereas May delivery was up $4.16 to $98.28 on the most active contract.
In early trading, WTI crude touched $99.10 a barrel before falling down to $95.78 a barrel, an increase of $4.19, or 4.6 percent.
The US and Europe’s removal of some Russian banks from the SWIFT system has increased fears of a supply interruption, according to commodity strategist Daniel Hynes of ANZ.
Supply risk is at its highest after quite some time, he added, especially given how tight the market is.
As a result of sanctions imposed by Western countries and the withdrawal of some Russian banks from the SWIFT international payment system, Russia’s exports of all commodities have been severely disrupted. In the physical markets, Russian crude oil grades had already taken a beating.
Russia supplies around 10% of the world’s oil
From $95 per barrel to $115 per barrel, Goldman Sachs bank’s one-month Brent price prediction has risen.
This includes oil, which the bank expects to rise in price in the near future as a result of Russia’s increased production.
Russian soldiers had taken two minor Ukrainian towns, but they came into heavy opposition in most Ukrainian areas.
Russian and Ukrainian representatives will meet on Monday to discuss the immediate cessation of hostilities and the departure of Russian soldiers, according to the Ukrainian reports.
This meeting might result in a significant reversal in markets, according to OANDA analyst Jeffrey Halley, who expects stock prices to climb, the dollar to strengthen, and oil prices to plummet.
Organization of Petroleum Exporting Countries (OPEC), Russia and its allies – collectively named OPEC+ – plan to meet on March 2 despite the conflict in Ukraine. In the month of April, the group intends to add 400,000 barrels per day (bpd).
Oil market surplus forecasts were cut down by around 200,000 barrels per day to 1.1 million barrels per day before the meeting, underlining the tightness of the market.
Meanwhile, a different study shows that in January, the combined output of OPEC and its allies fell short of their agreed-upon goals by 972,000 barrels per day.
Any disruption in the Russian oil supply would have a substantial impact on the market because of the tightness of the market, ANZ’s Hynes said.
