Oil soars 3% to 7-year highs on Ukraine jitters and tight supplies

Crude oil storage tanks are seen from above at the Cushing Petroleum Center in Cushing, Oklahoma March 24, 2016. Picture taken March 24, 2016. REUTERS/Nick Oxford

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  • Washington warns of imminent Russian invasion of Ukraine
  • Britain’s Johnson tells allies he fears for Europe’s security
  • Saudi Arabia and the United Arab Emirates could calm volatility by increasing production – IEA
  • US drillers add most oil rigs in a week since February 2018

Feb 11 (Reuters) – Oil prices ended up 3% on Friday at new seven-year highs as fears grew of an invasion of Ukraine by Russia, one of the main oil producers. energy, heightened concerns about global crude oil supplies.

Russia has massed enough troops near Ukraine to launch a major invasion, Washington said, as it urged all US citizens to leave the country within 48 hours. Read more

Britain has also advised its nationals to leave Ukraine, with Prime Minister Boris Johnson insisting on the need for NATO allies to make it clear that a hefty package of economic sanctions will be ready to roll. if Russia invaded Ukraine. Read more

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Brent crude futures settled $3.03, or 3.3%, at $94.44 a barrel, while U.S. West Texas Intermediate crude rose $3.22, or 3, 6%, to $93.10 a barrel.

Both benchmarks hit their highest since late 2014, surpassing highs reached on Monday, and posted their eighth consecutive week of gains on growing concerns about global supply as demand recovers from the coronavirus pandemic.

Trading volumes soared in the past hour of trading, with volumes on the global benchmark Brent index hitting their highest level in more than two months.

“The market doesn’t want to be short by the weekend…if an invasion seems imminent and you know there will be a retaliatory sanction that will lead to an interruption in the supply of natural gas and oil” said Andrew Lipow, president of Lipow Oil Associates in Houston.

The International Energy Agency has raised its demand forecast for 2022 and expects global demand to rise by 3.2 million barrels per day (bpd) this year, reaching an all-time high of 100.6 million bpd.

The energy watchdog’s report follows the Organization of the Petroleum Exporting Countries’ warning earlier this week that global oil demand could rise even more strongly this year if there is a strong recovery. post-pandemic economy.

The IEA added that Saudi Arabia and the United Arab Emirates could help calm volatile oil markets if they pumped in more crude, adding that the OPEC+ alliance produced 900,000 bpd below target in January. .

The two OPEC producers have the most spare production capacity and could help relieve dwindling global oil inventories that have been among the factors pushing prices toward $100 a barrel, worsening inflation around the world.

The Biden administration has reacted to the high prices by saying again this week that it has spoken with large producers about increased production, as well as the possibility of additional strategic exits from large consumers, as it said. did at the end of last year.

The US-Iranian nuclear talks resumed this week after a 10-day hiatus. A deal could see the lifting of sanctions on Iranian oil and ease tensions over supplies.

In the United States, drillers added the most oil rigs in a week in four years, with the number of rigs, an indicator of future production, rising from 19 to 516, its highest since April 2020, said energy services company Baker Hughes Co.

(This story corrects to remove the word “registration” in the fifth paragraph.)

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Additional reporting by Ahmad Ghaddar and Ron Bousso in London; Emily Chow in Beijing; Editing by Marguerita Choy and David Gregorio

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