Oil prices increased again on the back of escalating sanctions against Russia over its invasion in Ukraine as Kyiv continues to hold out against Russian forces and President Vladimir Putin ordered the country's nuclear forces to be on high alert.
The price of Brent crude oil has jumped back above $100 per barrel following an initial surge of more than $7 as the nuclear alert and restrictions on bank payments in Russia heightened fears that oil shipments from the world's second-largest producer could be disrupted.
Brent crude futures rose 4% or $3.95 to $101.88 today after reaching a daily high of $105.07 earlier. The benchmark hit a more than seven-year high of $105.79 after the invasion began last week.
US West Texas Intermediate (WTI) crude futures increased 5% or $4.55 to $96.11 per barrel after hitting $99.10 earlier in the day and as high as $100.54 last week.
"Moves by the US and Europe to remove certain Russian banks from the SWIFT system have raised fears of a disruption to supply of some sort in the near term," NZ commodity strategist Daniel Hynes told Reuters.
In Association with
"The risk to supply is the greatest we've seen for some time and it comes in a tight market," he said, with Russia accounting for around 10% of global oil supply.
Putin responded to Ukrainian forces' ongoing resistance by ordering Russia's "deterrence forces", which are armed with nuclear weapons, onto high alert, citing aggressive statements by NATO leaders and a range of economic sanctions imposed on Russia by the west,
Russia continues to call its actions in Ukraine a "special military operation" to liberate the breakaway regions of Donbass and Luhansk and "denazify" the country, which Putin claims has been taken over by far-right figures.
"President Putin's decision to put Russian nuclear forces on high alert is a clear and worrying escalation that can only be supportive for oil prices," said Stephen Brennock of oil broker PVM.
Organisation of Petroleum Exporting Countries (OPEC) nations, Russia and its allies, together called OPEC+, are due to meet on 2 March, and the group is expected to stick to plans to add 400,000 barrels per day of supply in April.
Ahead of the meeting, OPEC+ revised down its forecast for the oil market surplus for 2022 by about 200,000 barrels per day to 1.1m barrels per day. Data from the OPEC+ technical committee report shows stock in the developed world falling to 62m barrels below the 2015-19 average by the end of the year.
A separate report showed OPEC+ in January produced 972,000 barrels per day less than their agreed targets.
Economic sanctions imposed by western nations are having a devastating effect on the Russian economy, with the Russian rouble dropping 28% in value to a record low in early morning trading and the MOEX stock market remaining closed for time being, while the Russian central bank has banned foreign selling of Russian securities.
