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May
Brent crude futures were up $6.10, or 6.23%, to $104.07 a barrel
by 1252 GMT. The benchmark touched a seven-year high of $105.79
after the invasion began last week.
U.S. West Texas Intermediate (WTI) April crude futures were up
$5.38, or 5.62%, at $101.10, its highest since July 2014.
A Russian armoured column bore down on Ukraine's capital Kyiv on
Tuesday after deadly shelling of civilian areas in its second
largest city indicated that frustrated Russian commanders could
resort to more devastating tactics to achieve their goals.
Russia said on Tuesday its forces had cut off the Ukrainian
military from the Sea of Azov north of the Black Sea.
Russia's economic isolation deepened as the world's biggest
shipping firm Maersk on Tuesday said it would halt container
movement to and from Russia. Britain meanwhile has banned all
ships with any Russian connection from entering British ports.
"The fragile situation in Ukraine and financial and energy
sanctions against Russia will keep the energy crisis stoked and
oil well above $100 per barrel in the near-term and even higher
if the conflict escalates further," Louise Dickson, senior oil
market analyst from Rystad Energy, wrote in a note.
Major oil and gas companies, including BP and Shell, have
announced plans to exit Russian operations and joint ventures
while Total said it would not invest further capital in its
Russian operations.
Buyers of Russian oil are facing difficulty over payments and
vessel availability due to sanctions with BP cancelling fuel oil
loadings from a Russian Black Sea port.
Still, the market mood was helped by the United States and
allies discussing a coordinated release of crude stocks to
mitigate supply disruption. That release could reach 60 million
to 70 million barrels, media outlets reported.
"OPEC will likely stick to its original plan of a monthly
400,000 bpd increase, which will not alleviate fears," Tamas
Varga, analyst at PVM Oil Associates, said.
The Organization of the Petroleum Exporting Countries and other
producers - including Russia - will meet on Wednesday.
"The U.S. is coordinating an additional SPR (strategic petroleum
reserve) release and today, the IEA's extraordinary meeting
should also address the issue of energy security. These might
provide short-term relief," Varga added.
The International Energy Agency (IEA) is set to hold an
extraordinary ministerial meeting on Tuesday to discuss what
role its members can play in stabilising the oil market.
Meanwhile, Asia's factories sustained a brisk recovery in
February amid signs the coronavirus pandemic was having less of
an impact on business, implying an uptick in oil demand.
Russia, which calls its actions in Ukraine a "special
operation", exports some 4 million to 5 million barrels per day
of crude oil, and 2 million to 3 million barrels per day of
refined products.
(Reporting by Julia Payne in London and Muyu Xu in Beijing;
editing by Jason Neely and Louise Heavens)
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