Oil Jumps 3% as US Awaits Russian Invasion of Ukraine

By Adedapo Adesanya

Oil prices closed higher on Friday, moving closer to $95 per barrel on news that officials of the United States believe Russia is close to invading Ukraine.

Such a move could spur sanctions against Russian exports of oil and gas, causing supply to fall and prices to rise.

As a result, the Brent crude futures rose 3.8 per cent or $3.03 to $94.88 while the US West Texas Intermediate (WTI) crude rose $3.22 or 3.58 per cent to $93.10 per barrel.

US National Security Advisor, Mr Jake Sullivan, said at a White House briefing on Friday that there were signs of Russian escalation at the Ukraine border and that it was possible that an invasion could take place during the Olympics, despite speculation to the contrary.

“We continue to see signs of Russian escalation, including new forces arriving at the Ukrainian border. As we’ve said before, we are in the window when an invasion could begin at any time,” Mr Sullivan said.

Also, the United Kingdom Foreign Office said in an update on its website that its nationals should leave Ukraine now, while commercial means are still available.

Several analysts have predicted that oil prices could rise above $100, with the conflict being a key catalyst. In the near term, any changes in expectations about a potential invasion could cause swings in the price.

Oil prices are expected to remain extremely volatile and sensitive to incremental updates regarding the Ukraine situation.

Prices had already been up more than 2 per cent earlier in the session following the International Energy Agency’s latest oil report.

The IEA in its closely watched Oil Market Report for February said that if the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) continues to fail in delivering its oil production targets amid rising demand and inventories at multi-year lows, oil prices will remain under upward pressure and are set for more volatility.

The gap between OPEC+ output and its target levels surged to as much as 900,000 barrels per day in January.

This year’s estimated global growth rates remain largely unchanged, the agency said, expecting world oil demand to rise by 3.2 million barrels per day this year and reach 100.6 million barrels per day, as restrictions to contain the spread of COVID ease.