Crude oil futures are soaring again to kick off the trading week. Most energy commodities are rising on an attack on Saudi Arabia oil facilities and the Ukraine-Russia military conflict hitting the one-month mark, triggering growing supply concerns. Is this the start of another substantial rally in the coming sessions?
April West Texas Intermediate (WTI) crude oil futures advanced $3.98, or 3.86%, to $107.07 per barrel at 13:30 GMT on Monday on the New York Mercantile Exchange. US crude is coming off a weekly gain of about 4%, adding to its year-to-date gain of more than 42%.
Brent, the international benchmark, for oil prices, topped $112 overseas. May Brent crude futures climbed $4.39, or 4.07%, to $112.32 a barrel on London’s ICE Futures exchange. Brent prices are also up about 40% so far this year.
The war in Eastern Europe is showing no signs of abating, leaving investors worried that this conflict will linger and take a significant hit on global energy supplies. This is in addition to Western countries ditching Russian oil, something that could exacerbate an already tight market.
In view of the actions of the Russian armed forces in Ukraine, which are increasingly targeting also the civilian population, there is growing pressure on Europe to follow the U.S. lead,” said Commerzbank analyst Carsten Fritsch.
“The EU is much more dependent on Russian oil, however, covering almost 30% of its import needs with crude oil from Russia. In the case of diesel, Russian oil even accounts for as much as 80% of its net imports. This means that large quantities would have to be obtained elsewhere, which would further tighten the market. This would then further step up the pressure on OPEC+ to produce more oil.”
Meanwhile, Saudi Arabia, which has refrained from heeding to the West’s calls for greater production, suffered an attack on its oil facilities by Houthi rebels.
In response to the attacks, the Saudis assured everyone that it “won’t bear any responsibility” for the international crude shortage.
“The international community must assume its responsibility to preserve energy supplies,” the Saudi statement noted.
The US and the UK have urged Riyadh to turn on the taps and replace Russian crude. However, it is unclear if the Kingdom will agree to these demands without speaking to members of the Organization of the Petroleum Exporting Countries (OPEC).
In other energy markets, April natural gas futures slumped $0.082, or 1.67%, to $4.819 per million British thermal units (Btu). April gasoline futures added $0.1029, or 3.18%, to $3.3417 a gallon. April heating oil futures picked up $0.1549, or 4.58%, to $3.5370 per gallon.