Oil jumps over 3% as deaths near Kyiv prompt talk of new sanctions

Oil prices jumped over 3% on Monday, with investors worried about
tighter supply as mounting civilian deaths in Ukraine increased
pressure on European countries to impose sanctions on Russia’s energy
sector.

Global benchmark Brent crude jumped$3.14, or 3%, to settle at $107.53
a barrel. U.S. West Texas Intermediate crude rose $4.01, or 4%, to
settle at $103.28 a barrel. Trading was volatile with both contracts
rising after being down more than $1.

German Chancellor Olaf Scholz said Russian President Vladimir Putin
and his supporters would “feel the consequences” of events in Bucha,
outside the capital Kyiv, where a mass grave and tied bodies shot at
close range were found. read more

Western allies would agree on further sanctions against Moscow in the
coming days, he said, though the timing and reach of the new package
were not clear.

France’s President Emmanuel Macron suggested sanctions on oil and
coal, adding there were very “clear clues pointing to war crimes” by
Russian forces.

Since Russia’s Feb. 24 invasion of Ukraine, sanctions and buyers’
avoidance of Russian oil has already dented output and raised fears of
tighter supplies. read more

“As the U.S. and EU reduce purchases of Russian oil, it leaves China
and India as the main customers that remain and many of the refineries
in those countries might be reluctant to purchase Russian oil with the
negative public relations associated,” said Andrew Lipow, president of
Lipow Oil Associates in Houston.

Crude dropped by about 13% last week after President Joe Biden
announced a record U.S. oil reserves release and as International
Energy Agency members committed to further tapping reserves. Brent
crude hit $139 last month, its highest since 2008. read more

Saudi Arabia’s state oil producer Aramco (2222. SE) raised its May
official selling price to Asia for its flagship Arab Light crude,
according to a pricing document seen by Reuters.

“That suggests demand for oil is still very strong, and by doing that
it’s going to drain oil supplies from the United States and make
supplies tighter,” said Phil Flynn, an analyst at Price Futures Group.

Oil gained support from a pause in talks in Vienna to revive the Iran
nuclear deal, which would allow the lifting of sanctions on Iranian
oil. Iran blamed the United States for the halt. read more

Downward pressure came from a truce in Yemen, which could ease threats
to supply in the Middle East.

For the first time in the seven-year conflict, the United Nations has
brokered a two-month truce between a Saudi-led coalition and the
Houthi group aligned with Iran. Saudi oil facilities have come under
Houthi attack during the fighting. read more

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