Russia has frequently denied that it has any ambitions to invade Ukraine, and its foreign minister has said that he would propose that diplomatic negotiations with the West be continued in the future.
Oil prices soared as simmering geopolitical tensions between Russia and Ukraine kept the market on edge and volatility at an all-time high, analysts said.
For the first time since 2014, the West Texas Intermediate crude oil price surpassed $95 per barrel. In a statement released Friday, National Security Advisor Jake Sullivan warned that Russia might launch offensive military action or seek to create a confrontation inside Ukraine as early as this week. Russia has frequently denied that it has any ambitions to invade, and its foreign minister has said that he would recommend that diplomatic relations with the West remain.
A hypothetical Russian invasion of Ukraine would not only affect crude oil supplies, but it would also raise the possibility of punitive penalties by the United States on Russia. Recent increases in oil prices have been driven by expectations that demand would outstrip supply as the global economy recovers from the epidemic.
According to Scott Shelton, energy analyst at ICAP, "With a lack of clarity on the impact on oil, as well as extraordinarily low inventories, the market is obviously scared here and buying."
Despite the fact that oil prices have been bouncing dramatically in recent days as tensions in Ukraine escalate, the fundamental market remains strong. Oil prices are reaching record highs as physical barrels priced off a major global benchmark reach record highs, and the difference between Brent crude's two closest futures contracts has reached $2 a barrel, a positive indication.
The scenario is poised to enter a potentially crucial week in the near future. Russia has deployed soldiers along the Ukrainian border, prompting the United States to warn last week that massive military action may be on the horizon if the situation continues. Russian President Vladimir Putin has said on several occasions that his nation has no intention of invading its smaller neighbor.
Oil prices are trading at record highs as a result of the crisis, which is reinforcing a rise that has been fueled by rising global demand, supply disruptions, and dwindling stocks. Until the appearance of the omicron virus version in October, the company's weekly advances had been the longest in its history. A possible confrontation, along with punitive sanctions spearheaded by the United States, would have the ability to disrupt global oil supplies.
Prices: WTI for March delivery increased $2.40 to $95.50 a barrel at 2:27 p.m. in New York, according to the Energy Information Administration.
Brent crude for April delivery increased by $2.10 to $96.54 a barrel.
After oil prices surged on Friday as a result of tensions in Ukraine, the oil option markets experienced a flurry of activity. Traders are paying exorbitant premiums for bullish call options, in which rising prices would benefit the buyer if the option were exercised. According to Bloomberg statistics, they have been the most costly compared to bearish put options since January 2019.
Associated coverage includes:
Prices of natural gas and electricity in Europe have risen by more than 10% as a result of the ongoing crisis in Ukraine.
Oil importers are scrambling to evaluate the danger of acquiring Russian supplies as tensions over Ukraine reach a potentially pivotal week, according to industry sources.
From June 2023, S&P Global Platts proposes to include WTI Midland crude in the Dated Brent and Cash BFOE evaluations for North Sea oil trade, in addition to the current assessments.
SOURCE: NEWS AGENCIES
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