Oil steadies from decade highs as Iran talks kindle hopes

Crude surged close to $120 in early hours

HOUSTON:

Oil steadied after hitting prices not seen in roughly a decade on Thursday, as sellers jumped in on hopes that the United States and Iran will agree soon to a nuclear deal that could add barrels to a badly undersupplied market.

Trade was volatile, however, as investors anticipate ongoing disruption to worldwide oil flows due to heavy sanctions on Russia after Moscow invaded Ukraine a week ago. Russia exports 4 to 5 million barrels of crude per day, second-most worldwide behind Saudi Arabia, and companies are now shunning Russian supply and scrambling for barrels elsewhere.

Brent futures rose $0.61, or 0.5%, to $113.54 a barrel by 11:23 AM EST (1723 GMT), while US West Texas Intermediate (WTI) crude rose $0.15, or 0.1%, to $110.75.

Both benchmarks rose to multi-year highs earlier in the session, with Brent soaring to $119.84, its highest since May 2012 and WTI hitting its highest since September 2008 at $116.57.

Read: Iran blames US-led NATO provocations for Ukraine crisis

Washington and its Western allies have imposed sanctions on Russia over its invasion of Ukraine, but the measures have so far stopped short of targeting Russian oil and gas exports. A new round of sanctions announced by the White House on Wednesday ban the export of specific refining technologies, making it harder for Russia to modernise its oil refineries.

But international traders are still wary of becoming entangled in sanctions. At least 10 tankers failed to find buyers on Wednesday, market sources said.

Global benchmark Brent has jumped nearly 25% since the Russian invasion of Ukraine on February 24. Brent’s six-month spread hit a record high of over $21 a barrel, indicating very tight supplies.

Published in The Express Tribune, March 4^th, 2022.

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