Oil prices climbed to start the week on Monday, and were set to extend a recent run to three sessions, as the war in Ukraine showed no signs of abating or resolving, and speculation rose that the EU could join the U.S. in banning Russian energy products.
West Texas Intermediate crude for April
delivery climbed $4.51, or 4.3%,to $109.21 a barrel. Crude settled 1.7% higher on Friday at $104.70 a barrel on the New York Mercantile Exchange. The front-month contract dropped 4.2%, according to Dow Jones Market Data.
May Brent crude
rose $4.43, or 4.3%, to $112.59 a barrel. The global benchmark climbed 1.2%, to $107.93 a barrel on ICE Futures Europe on Friday, dropping 4.2% on the week.
April natural gas
edged up 0.7% to $4.896 per million British thermal units, after last week’s 2.9% gain.
Ahead of a meeting on of the bloc’s foreign minsters on Monday, Lithuania’s representative Gabrielius Landsbergis and Ireland’s Simon Coveney both expressed support for imposing sanctions on Russian energy, Reuters reported.
The U.S. and U.K. have both banned Russian oil, but the EU is much more conflicted, give its reliant on that country’s energy supplies. The meeting follows another weekend of death and destruction in Ukraine, with heavy Russia shelling across the country, and a diplomatic solution still seemingly far off.
“In view of the actions of the Russian armed forces in Ukraine, which are increasingly targeting also the civilian population, there is growing pressure on Europe to follow the U.S. lead,” said Commerzbank analyst Carsten Fritsch.
“The EU is much more dependent on Russian oil, however, covering almost 30% of its import needs with crude oil from Russia. In the case of diesel, Russian oil even accounts for as much as 80% of its net imports. This means that large quantities would have to be obtained elsewhere, which would further tighten the market. This would then further step up the pressure on OPEC+ to produce more oil,” he said, in a note to clients.
In the latest developments, Russia was accused of shelling an art school sheltering 400 people, and Ukraine rejected a Moscow ultimatum that Ukrainians in the besieged city of Mariupol surrender their weapons in exchange for a safe exit.
President Joe Biden will stop in Poland this week before arriving in Brussels for urgent talks with NATO and European allies on an ongoing response to Russia’s aggression, along with boosting the bloc’s own deterrence and defense.
Also helping lift prices of oil for Monday was an attack on Saudi Arabia oil facilities over the weekend by Houthi rebels. “Though no serious damage was caused, this make it clear that supply outages are also a distinct possibility there, which would be virtually impossible to offset in current environment,” said the analyst.
Oil futures contracts logged hefty losses last week, as investors grew optimistic over negotiations between Russia and Ukraine, which faded by the end of the week.