Oil Climbs on Escalating Ukraine Tension, Impasse in Iran Talks

© Reuters

(Bloomberg) — Oil rose in early Asian trading on intensifying tensions in Ukraine and an impasse in efforts to revive Iran’s nuclear agreement.

West Texas Intermediate climbed as much as 2% at the open after posting its first weekly decline since mid-December. The U.S. has told allies that any Russian invasion of Ukraine would potentially see it target multiple cities beyond the capital Kyiv, according to three people familiar with the matter. Moscow, which has repeatedly denied it plans an invasion of its neighbor, said over the weekend that its forces would remain in Belarus indefinitely.

Meanwhile, negotiations in Vienna to rekindle the 2015 nuclear agreement with Iran remained bogged down, with Germany’s chancellor warning that it’s now or never to save the accord. An agreement could usher in a return to the world market of official supplies from the Persian Gulf nation.

Crude surged to the highest level since 2014 last week as the Ukraine crisis reinforced a rally that’s been underpinned by soaring global demand, supply interruptions, and declining stockpiles. A Russian invasion, coupled with retaliatory U.S.-led sanctions, risks upending global energy flows.

Oil prices could be set for a “prolonged period” above $100 a barrel over the next six to nine months, with the world setting fresh demand records this year, Vitol Group Chief Executive Officer Russell Hardy said in an interview with Bloomberg Television. That would further fan global inflationary pressures as leading economies extend their recovery from the pandemic.

©2022 Bloomberg L.P.