Oil prices plummet after surge in Russian invasion of Ukraine

A general view shows an oil processing plant in the Yarakta oil field, owned by Irkutsk Oil Company (INK), in Irkutsk region, Russia March 10, 2019. Picture taken March 10, 2019. REUTERS/ Vasily Fedosenko

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  • American platform counts to 2 in 522 -Baker Hughes
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  • Ukraine clashes with Russian forces

NEW YORK, Feb 25 (Reuters) – Oil prices fell on Friday after strong gains at the start of the session on concerns over potential global supply disruptions from sanctions on the top Russian crude exporter .

April Brent crude futures fell $2.29, or 2.3%, to $96.79 a barrel at 1:15 p.m. EST (1815 GMT), after climbing as high as $101.99. The more active May contract lost $1.72, or 1.8%, to $93.70.

U.S. West Texas Intermediate (WTI) crude fell $1.81, or 2%, to $91.00 a barrel, after hitting a high of $95.64.

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For the week, Brent was expected to rise around 3.5%, while WTI was on track to fall around 2.2%.

On Thursday, Russia’s invasion of Ukraine pushed prices above $100 a barrel for the first time since 2014, with Brent rising to $105, before paring gains as trade closed.

The assault was the largest attack on a European state since World War II, prompting tens of thousands to flee their homes. On Friday, Russian missiles pounded Kiev, families hunkered down in shelters and authorities told residents to prepare Molotov cocktails to defend the Ukrainian capital. Read more

On Thursday, US President Joe Biden responded to the invasion with a wave of sanctions that hamper Russia’s ability to do business in major currencies, as well as sanctions on banks and state-owned companies. Read more

Britain, Japan, Canada, Australia and the European Union also unveiled sanctions, including a decision by Germany to suspend certification of an $11 billion Russian gas pipeline. Read more

However, Russia will not see its oil and gas flows specifically targeted by sanctions, a US official has said. The country is the world‘s second largest producer of crude oil and a major supplier of natural gas in Europe. Read more

“As many as 2.3 million bpd of Russia’s 4.6 million bpd of crude oil exports go to the West,” Wood Mackenzie said in a note. “We are seeing a slowdown in Russian crude purchases. Until payment terms are clarified, a further tightening of the supply and demand balance is expected.”

Biden said the United States was working with other countries on a combined release of additional oil from its strategic crude reserves. Read more

“Obviously the SPR (Strategic Petroleum Reserve) talk is still there and that’s been a negative factor, but the weekend uncertainty is going to be supportive,” said Phil Flynn, senior analyst at Price Futures Group. in Chicago.

Major buyers of Russian oil are struggling to get guarantees from Western banks or find ships, sources told Reuters. Read more

A deal between OPEC+ oil producers shows no cracks so far, OPEC+ sources told Reuters, and the group is expected to stick to a planned production increase of 400 000 barrels per day in April despite crude exceeding $100 a barrel. Read more

The alliance, which brings together the Organization of Petroleum Exporting Countries and Producers including Russia, meets on Wednesday to make the decision.

In an indication of future U.S. supply, the number of oil-headed rigs rose by 2 to 522 in the week to Feb. 25, data from the service company showed on Friday. Baker Hughes tankers.

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Additional reporting by Emily Chow in Beijing; edited by Jason Neely, Kirsten Donovan and David Gregorio

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