Oil prices rise more than 2% as Putin mobilizes more troops

Oil prices rise more than 2% as Putin mobilizes more troops

Bombs are seen during sunset at the Daqing oil field in Heilongjiang province, China, August 22, 2019. REUTERS/Stringer

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SINGAPORE, Sept 21 (Reuters) – Oil rose more than 2% on Wednesday after Russian President Vladimir Putin announced a partial military mobilization, intensifying the war in Ukraine and raising concerns about oil supply and tighter gas.

Brent crude futures were up $2.28, or 2.5%, at $92.90 a barrel by 0707 GMT after falling $1.38 the day before.

US West Texas Intermediate crude was trading at $86.16 a barrel, up $2.22 or 2.6%.

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Putin said he had signed a partial mobilization decree as of Wednesday, saying he was defending Russian territories and the West wanted to destroy the country. read more

The escalation will lead to greater uncertainty about Russian energy supplies, said Warren Patterson, head of commodity research at ING.

“The move could lead to calls for more aggressive action against Russia in terms of sanctions from the West,” he said.

Oil spiked to a multi-year high in March after the Ukraine war broke out.

European Union sanctions banning seaborne imports of Russian crude will take effect on December 5.

“It seems like a knee jerk reaction to a small piece of news and it’s likely to recalibrate in the next few hours,” said Vandana Hari, founder of Vanda Insights in Singapore.

Meanwhile, the United States said it did not expect a breakthrough in reviving the 2015 Iran nuclear deal at the UN General Assembly this week, dimming prospects for a return of Iranian barrels to the international market. read more

The OPEC+ producer group, the Organization of the Petroleum Exporting Countries and their partners, including Russia, is now falling a record 3.58 million barrels per day short of its production targets, or about 3.5% of world demand. The shortfall highlights the underlying scarcity of supply in the market. read more

Investors this week have been bracing for another aggressive interest rate hike by the US Federal Reserve that they fear could trigger a recession and slump in fuel demand.

The Fed is expected to raise rates by 75 basis points for the third straight time later on Wednesday in its push to rein in inflation.

Meanwhile, US crude oil and fuel stocks rose by around 1 million barrels during the week ending September 16, according to market sources citing figures from the American Petroleum Institute on Tuesday.

US crude oil inventories are estimated to have risen last week by about 2.2 million barrels in the week to September 16, according to an expanded Reuters survey.

The head of Saudi state-owned oil giant Aramco (2222.SE) warned on Tuesday that the world’s spare oil production capacity may be quickly depleted as the global economy recovers. read more

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Reporting by Yuka Obayashi, Isabel Kua, and Florence Tan; Edited by Kenneth Maxwell, Ana Nicolaci da Costa, and Kim Coghill

Our standards: the Thomson Reuters Trust Principles.

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