Oil Prices Rises 3% as Tensions Heighten in Russia-Ukraine Row

By Adedapo Adesanya

Oil prices rose more than 3 per cent on Monday as Russian President Vladimir Putin recognised two breakaway regions in eastern Ukraine as independent entities on Monday, increasing fears of a major war.

Brent crude gained 3.02 per cent or $3.01 to trade at $96.33 per barrel as the US West Texas Intermediate (WTI) crude improved by 3.16 per cent or $2.88 to $93.95 a barrel.

In a television address, Mr Putin described Ukraine as an integral part of Russia’s history and said eastern Ukraine was ancient Russian lands and that he was confident that the Russian people would support his decision.

He announced his decision in phone calls to the leaders of Germany and France, who voiced disappointment, the Kremlin said, and was later shown on state television signing the decree.

“I deem it necessary to make a decision that should have been made a long time ago – to immediately recognise the independence and sovereignty of the Donetsk People’s Republic and the Luhansk People’s Republic,” Mr Putin said.

He also said that “if Ukraine was to join NATO, it would serve as a direct threat to the security of Russia.”

Analysts note that the recognition of the rebel-held areas could pave the way for Russia to send military forces into the two separatist regions – Donetsk and Luhansk – openly and argue that it is intervening as an ally to protect them against Ukraine.

The European Union warned it would consider sanctions if the regions are recognized as independent.

Sanctions to a major energy market signal bullish moves for oil prices.

Another factor to the bullish sentiment was that several of the biggest oil producers under the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) want the continuation of the addition of another 400,000 barrels a day of crude to the market in April.

Ministers of Arab oil-producing countries said on Sunday that the alliance should stick to its output level as they gathered in Saudi Arabia, rejecting calls to pump more to ease pressure on prices.

The calls for OPEC+ to increase output faster come amid tight supplies caused by its struggle to meet quotas.