Oil prices rebounded on Friday as fears of Western sanctions that could disrupt Russian oil exports outweighed the possibility of more Iranian supplies while reports of a nuclear plant fire in Ukraine spooked financial markets.
Global stocks fell and oil prices rose on signs of an escalation in the Russia-Ukraine conflict after reports of a fire at a Ukrainian nuclear power plant after an attack by Russian troops.
Fears of a potential nuclear disaster at the Zaporizhzhia plant, Europe’s largest, had spread alarm across world capitals before authorities said the fire in a building identified as a training centre had been extinguished.
Brent crude futures for May rose as high as $114.23 a barrel and by 0755 GMT were up 73 cents, or 0.7 per cent, at $111.19.
US West Texas Intermediate for April rose $1.21, or 1.1 per cent, to $108.88 after touching a high of $112.84 earlier in the session.
Crude oil prices are set to post their strongest weekly gains since the middle of 2020, with WTI up 19 per cent and Brent 13 per cent 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, the world’s biggest exporter of crude and oil products combined. Trading activity for Russian crude slowed as buyers hesitate to make purchases because of the sanctions and while US President Joe Biden comes under growing pressure to ban US imports of Russian oil.
“The escalation of Russia’s war in Ukraine has not only caused geopolitical risks, but is adding to already elevated inflationary concerns as well as driving increased risk premiums,” RBC Capital analyst Christopher Louney said in a note.
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, though that is 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 but said “the risk is that prices rise above our forecast in the short term”, adding that it is plausible Brent futures could reach $150.
REUTERS