Crude Oil Prices Rise Over 0.5% On Tuesday, Tracking Russia-Ukraine Conflict
Crude oil prices rose over 0.5% on Tuesday, as the Russia-Ukraine conflict drags on, albeit well below a seven-year high after Russia's invasion of Ukraine began last week, which is the most significant attack on a European country since World War Two.
While global financial markets paused early on Tuesday after several days of gyrations, with gold slipping slightly, investors were in a wait-and-watch mode, tracking the Ukraine conflict unfolding and weighing its economic implications, notably regarding energy prices.
Still, investors weighed on a coordinated international release of crude inventories against Russian supply disruptions in the wake of Moscow's invasion of Ukraine.
Concerns over tightening supplies come as significant oil and gas companies, including BP and Shell, have announced plans to exit Russian operations and joint ventures.
Buyers of Russian oil are also facing difficulty over payments, and vessel availability as Western sanctions in response to the invasion of Ukraine take hold.
The benchmark Brent crude futures rose to over $98 per barrel on Tuesday, but below a seven-year high of $105.79 on discussions of a coordinated release of crude stocks by the US and allies to mitigate any disruption of oil and gas supplies from Russia.
"A lot of what's been happening in markets is obviously overshadowed by the news around Ukraine and Russia in terms of negotiations, but the significant drivers are going to be the response from governments and central banks in terms of the policy settings," Kerry Craig, Sydney-based global market strategist at J.P.Morgan Asset Management, told Reuters.
"The markets are going to focus on the broader implications of what's going to happen around energy prices, what that means for inflation across parts of the world," he said.
To discuss stabilising oil markets, the International Energy Agency (IEA) is set to hold a ministerial meeting on Tuesday to discuss its members' role.
The Organization of the Petroleum Exporting Countries (OPEC) and other producers - including Russia - will also meet on Wednesday and will maintain a gradual increase to supplies.
For India, the immediate impact from the Russia-Ukraine war will be inflation, as the country imports almost 80 per cent of its oil needs, according to Investment Information and Credit Rating Agency (ICRA) of India.
Finance Minister Nirmala Sitharaman on Monday pointed out that Ukraine is a significant supplier of sunflower oilseeds and fertilisers, and the disruption in supply would impact essential commodities like edible oil.
She also said the government was worried about the impact of the Russia-Ukraine conflict on India's foreign trade, particularly farm sector exports.