Monday, May 16, 2022

Ukraine-Russia conflict: Oil rises above $100 for the first time

Because of Russia’s strike on Ukraine, oil prices soared on Thursday, with Brent exceeding $100 a barrel for the first time since 2014. This heightened fears that a conflict in Europe may disrupt the global energy supply.

Dmytro Kuleba, Ukraine’s Foreign Minister, claimed in a tweet that Russia had initiated a full-scale invasion of the country and was targeting cities with weapon strikes after Russian President Vladimir Putin authorized what he described as a “special military operation.”

Brent crude reached a high of $102.48 a barrel, the highest level since September 2014, and was trading at $102.06 a barrel at 0547 GMT, up to $5.22, or 5.4 percent, at 0547 GMT, the highest level since September 2014.

The United States West Texas Intermediate (WTI) crude futures increased by $4.85, or 5.3 percent, to $96.95 a barrel. The contract had previously reached a high of $97.40, the highest level since August 2014.

Fears of sanctions against Russia’s energy sector, which would disrupt supplies, have caused oil prices to soar by more than $20 a barrel since the beginning of 2022, according to the International Energy Agency.

Read Also: US urges PM Imran Khan to play his role in Russia-Ukraine conflict

Russia is the world’s second-biggest oil producer, with the vast majority of its petroleum sent to European refineries. It is also the world’s greatest natural gas supplier, accounting for around one-third of Europe’s total supply of natural gas.

In response to Russia’s launch of a special military operation in Ukraine, the price of Brent crude oil has risen to the $100 per barrel threshold, according to Warren Patterson, head of ING’s commodity research.

In addition, he stated that “increasing uncertainty at a time when the oil market is already tight makes it vulnerable,” and that “prices are likely to remain volatile and elevated.”

Russia was penalized with further sanctions by the Western Union and Japan on Tuesday for ordering soldiers into separatist regions of eastern Ukraine, and they vowed to go far further if Moscow launched an all-out invasion of its neighbor. At this time, there are no penalties against the energy trade.

OCBC economist Howie Lee explained that the problem is not simply a geopolitical danger but also a result of increased demand outstripping supply.

“If sanctions are imposed on Russia, the country’s energy supplies will disappear immediately and OPEC is unable to supply at a sufficient rate to close this enormous hole.”

A prospective settlement between Iran and world powers, according to some members of the Organization of Petroleum Exporting Countries (<a href="http://&lt;!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Because of Russia's strike on Ukraine, oil prices soared on Thursday, with Brent exceeding $100 a barrel for the first time since 2014. This heightened fears that a conflict in Europe may disrupt the global energy supply.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Dmytro Kuleba, Ukraine's Foreign Minister, claimed in a tweet that Russia had initiated a full-scale invasion of the country and was targeting cities with weapon strikes after Russian President Vladimir Putin authorized what he described as a "special military operation."</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Brent crude reached a high of $102.48 a barrel, the highest level since September 2014, and was trading at $102.06 a barrel at 0547 GMT, up to $5.22, or 5.4 percent, at 0547 GMT, the highest level since September 2014.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">The United States West Texas Intermediate (WTI) crude futures increased by $4.85, or 5.3 percent, to $96.95 a barrel. The contract had previously reached a high of $97.40, the highest level since August 2014.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Fears of sanctions against Russia's energy sector, which would disrupt supplies, have caused oil prices to soar by more than $20 a barrel since the beginning of 2022, according to the International Energy Agency.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Russia is the world's second-biggest oil producer, with the vast majority of its petroleum sent to European refineries. It is also the world's greatest natural gas supplier, accounting for around one-third of Europe's total supply of natural gas.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">In response to Russia's launch of a special military operation in Ukraine, the price of Brent crude oil has risen to the $100 per barrel threshold, according to Warren Patterson, head of ING's commodity research.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">In addition, he stated that "increasing uncertainty at a time when the oil market is already tight makes it vulnerable," and that "prices are likely to remain volatile and elevated."</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">Russia was penalized with further sanctions by the Western Union and Japan on Tuesday for ordering soldiers into separatist regions of eastern Ukraine, and they vowed to go far further if Moscow launched an all-out invasion of its neighbor. At this time, there are no penalties against the energy trade.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">OCBC economist Howie Lee explained that the problem is not simply a geopolitical danger but also a result of increased demand outstripping supply.</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">"If sanctions are imposed on Russia, the country's energy supplies will disappear immediately and OPEC is unable to supply at a sufficient rate to close this enormous hole."</p> <!– /wp:paragraph –> <!– wp:paragraph {"align":"justify"} –> <p class="has-text-align-justify">A prospective settlement between Iran and world powers, according to some members of the Organization of Petroleum Exporting Countries (OPEC), will raise supplies, eliminating the need for the organization and its allies to expand output further. Some OPEC countries are already having difficulties meeting their present targets.</p> OPEC), will raise supplies, eliminating the need for the organization and its allies to expand output further. Some OPEC countries are already having difficulties meeting their present targets.

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