Crude oil prices rose nearly 3 percent to $ 111 a barrel early Monday as supply concerns continued, with long positions in oil and commodities trading the most congested. Still, volatility is expected to be the theme of the news ebb and flow of the Ukraine-Russia peace talks.
The benchmark Brent crude oil contract for the final month was last trading at $ 111 a barrel, up more than 2.8 percent after closing at $ 107.93 a barrel in the previous session.
That came as Ukraine opposed a heavy Russian offensive and after the Ukrainian deputy prime minister said there was no question of handing over the city of Mariupol. With the conflict escalating, and reports that some major oil producers will struggle to meet their agreed supply quotas, the focus is returning to the supply gap.
According to the International Energy Agency, 3 million barrels a day of crude oil and Russian products will be off the market by April.
“Crude oil prices recovered from lows but showed weakness for the second week in a row after oil prices rose 7 percent from lows after the IEA said three million barrels a day (bpd) of Russian oil and products could be closed starting next month,” said Rahul Kalantri, VP. Commodities, Mehta Equities.
“Delays in the US-Iran deal and supply concerns from Russia could support crude oil prices at lower levels,” he added.
With the latest reports from the Organization of the Petroleum Exporting Countries and its allies, including Russia (OPEC+), showing some producers are still failing to reach their agreed supply quotas, it has added to investor concerns.
“The market continues to be concerned about supply disruptions, with data showing it is already having an impact,” ANZ analysts said in a note.