After making no headway in peace talks between Russia and Ukraine, oil prices rose on Friday, capping a third tumultuous week of trading. The prospect of stronger sanctions and a lengthy disruption in oil supplies loomed large.
Despite failures on the battlefield and punishing sanctions imposed by the West, Russian President Vladimir Putin has showed no signs of backing down. A fourth day of videoconference negotiations between Russian and Ukrainian negotiators took place, but no agreement was achieved, according to the Kremlin. find out more
At 0405 GMT, Brent crude futures were up $2.75, or 2.6 percent, to $109.39 a barrel, after soaring over 9% on Thursday, the greatest percentage advance since mid-2020.
WTI crude futures in the United States rose $2.93, or 2.9 percent, to $105.91 a barrel, adding to an 8 percent gain on Thursday.
Despite the rally, both benchmark futures were expected to close the week with a loss of approximately 3% after trading in a $16 range. Prices have fallen from 14-year highs reached little over a week ago.
“I’m still anticipating more turbulence. There’s still a lot of ambiguity out there “Justin Smirk, a senior economist at Westpac in Sydney, echoed this sentiment.
The rollercoaster swing during the week was fueled by supply constraints resulting from Russian sanctions, stalled nuclear talks with Iran, diminishing oil reserves, and concerns about an increase of COVID-19 cases in China impacting consumption.
According to analysts, statements from a Kremlin spokesman labeling a report of considerable progress in peace negotiations “false” and US President Joe Biden labelling Putin a “war criminal” sparked a surge of purchasing on Thursday.
Helima Croft, an analyst at RBC Capital, warned that Russian oil export losses are likely to be long-term, and that compensating barrels are in low supply.
“US Secretary of State Blinken is allegedly planning a visit to the UAE and Saudi Arabia later this month, with the oil request probably towards the top of the agenda,” she said in a note.
On-land product stocks in major nations are 39.9 million barrels lower for this time of year compared to the 2017-2019 average, and 45 million barrels lower year on year, according to consultancy FGE.