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Oil
prices soared after Russia invaded Ukraine and hit their highest
levels since 2008 but have pulled back a bit this week on hopes
that some producing countries may act to increase supply. Fears
about escalating bans on Russian oil persist, however, and were
back in focus again on Friday.
Brent crude futures climbed $2.86, or 2.6%, to $112.19 a barrel
by 1016 GMT. U.S. West Texas Intermediate (WTI) crude futures
were up $2.71, or 2.6%, to $108.73 a barrel.
Brent was on track for a weekly fall of 5.4% after hitting
$139.13 on Monday. U.S. crude was headed for a weekly drop of
6.2% after touching a high of $130.50 on Monday. Both contracts
last touched these price peaks in 2008.
Last week Brent rose over 20%, its biggest weekly rise in
percentage terms since May 2020 when Brent traded below $30 a
barrel.
Volatility was fuelled this week as the Russia-Ukraine conflict
pushed the United States and many Western oil firms to stop
buying Russian oil amid talk of potential supply additions from
Iran, Venezuela and the United Arab Emirates.
"We have a close eye on the pressure valves that will absorb the
supply shock," said UBS head of economics Norbert Ruecker.
"These include more strategic storage releases, more U.S. shale
oil, and more petro-nations' oil including the element of the
high diplomatic cost the West is willing to bear by possibly
allowing Iran and even Venezuela back to the market, and
ultimately the economic costs by high fuel prices curbing demand
and temporarily denting growth."
Commerzbank analysts said they now forecast Brent to trade above
$100 a barrel in the second quarter and around $90 a barrel by
the end of the year.
Russia is the world's top exporter of crude and oil products
combined, with exports of around 7 million bpd, or 7% of global
supply.
The European Union, heavily reliant on Russian energy, has not
joined the United States and Britain in banning Russian oil.
In the near term, supply gaps are unlikely to be filled by extra
output from members of the Organization of the Petroleum
Exporting Countries and allies, together called OPEC+, given
Russia is part of the grouping, Commonwealth Bank analyst Vivek
Dhar said.
In addition, some OPEC+ producers, including Angola and Nigeria,
have struggled to meet their production targets, further
limiting the group's ability to offset Russian supply losses.
(Additional reporting by Sonali Paul and Mohi Narayan; Editing
by Susan Fenton)
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