Oil rises above $105 as supply concerns persist

Workers walk as oil pumps appear in the background at the Ouzin oil and gas field in Kazakhstan’s Mangistau region, November 13, 2021. REUTERS/Pavel Mikheev

LONDON (Reuters) – Oil rose above $105 a barrel on Monday as concerns about supply tightness caused by Russia’s invasion of Ukraine and the lack of an Iran nuclear deal persisted despite countries releasing oil from strategic reserves.

The invasion of Ukraine in February sharply escalated concerns about supplies that were already supporting oil prices. Sanctions imposed on Russia and buyers shunning Russian oil have raised fears of larger supply losses this month.

Brent crude rose 63 cents, or 0.6 percent, to $105.02 a barrel by 0805 GMT. US West Texas Intermediate crude rose $1.08, or 1.1%, to $100.35. Both contracts were down $1 when markets opened on Monday.

“Will liberating barrels from the strategic reserves fill the shortage caused by sanctions and buyer alienation from Russian oil? In short, no,” said Stephen Brennock of BVM oil brokerage.

Brent crude fell about 13% last week after US President Joe Biden announced a record release of US oil reserves and members of the International Energy Agency committed to further tapping of the reserves. The price of crude oil reached $139 last month, the highest level since 2008. READ MORE

“This short-term measure to target low oil prices … does not solve the long-term problem,” said Naim Aslam of AvaTrade.

Oil also got a boost from stalled talks to revive the Iran nuclear deal, which would allow sanctions on Iranian oil to be lifted. On Monday, Iran blamed the United States for the ceasefire. Read more

Some of the downward pressure on prices came from the truce in Yemen, which could mitigate supply threats in the Middle East.

The United Nations brokered a two-month truce between a Saudi-led coalition and the Iran-aligned Houthi movement for the first time in the seven-year conflict.

Saudi oil facilities were attacked by the Houthis during the conflict, further interrupting supplies from Russia. Read more

(Reporting: Alex Lawler) Additional reporting by Florence Tan and Isabel Qua in Singapore Editing by David Goodman

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