Oil Rises as Tight Market Looks to Russia’s Western Diplomacy

An oil pump at sunset outside Schebenhard, near Strasbourg, France, October 6, 2017. REUTERS/Christian Hartmann

LONDON (Reuters) – Oil prices rose slightly on Monday as fresh diplomatic efforts to resolve the Ukraine crisis provided some relief from supply concerns that have kept oil prices close to $100 a barrel.

Brent crude futures rose 25 cents, or 0.3 percent, to $93.79 a barrel at 1000 GMT. US West Texas Intermediate crude futures rose 35 cents, or 0.4%, to $91.42 a barrel.

French President Emmanuel Macron said on Monday that US President Joe Biden and Russian President Vladimir Putin had agreed in principle on a summit on Ukraine, but the Kremlin said there were no immediate plans for a meeting. Read more

US markets will be closed Monday for the President’s Day holiday.

“The potential reduction in tensions in Ukraine … has seen the emergence of some sellers of oil in Asia,” said Jeffrey Halley, an analyst at OANDA.

European Commission President Ursula von der Leyen said Russia would be cut off from international financial markets and block access to key exports needed to modernize its economy if it invaded Ukraine. Read more

“If a Russian invasion occurs, as the US and UK have warned in recent days, Brent crude futures could rise to more than $100 a barrel, even if an Iranian deal is struck,” Commonwealth Bank analyst Vivek Dar said in a note.

Meanwhile, ministers of Arab oil-producing countries said on Sunday that OPEC+ should stick to its current agreement to add 400,000 barrels per day of oil production each month, rejecting calls to pump more to ease pressure on prices. Read more

Price gains were also limited by the prospect of more than 1 million barrels per day of Iranian crude returning to the market.

Iranian Foreign Ministry spokesman Saeed Khatibzadeh said “significant progress” had been made in talks to revive the 2015 Iran nuclear deal on Monday after a senior European Union official said on Friday the deal was “very, very close.” Read more

Analysts said the market remains tight and any addition of oil will help, but prices will remain volatile in the near term because Iranian crude is unlikely to return until later this year.

Additional reporting by Sonali Paul and Florence Tan; Editing by David Goodman

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