Doha: Oil prices slipped Friday after sharp rises early in the session on concern over potential global supply disruptions from sanctions on major crude exporter Russia. Brent crude futures contract fell $1.15, or 1.2 percent, to settle at $97.93 a barrel, after climbing as high as $101.99. US West Texas Intermediate crude fell $1.22, or 1.3 percent, to settle at $91.59 a barrel, after hitting a session high of $95.64.
For the week, Brent rose about 4.7 percent, while WTI was on track to rise about 0.6 percent. On Thursday, Russia’s invasion of Ukraine boosted prices above $100 a barrel for the first time since 2014, with Brent touching $105, before paring gains by the close of trade.
On Thursday, several countries responded to the invasion with a wave of sanctions that impede Russia’s ability to do business in major currencies along with sanctions against banks and state-owned enterprises. However, Russia will not have its oil and gas flows specifically targeted by sanctions, a US official said.
The country is the world’s second-largest crude producer and a major natural gas provider to Europe. Meanwhile, US President Joe Biden said the United States is working with other countries on a combined release of additional oil from their strategic crude reserves.
Asian spot liquefied natural gas prices surged more than 50 percent last week as they tracked a jump in European gas prices after Russia’s invasion of Ukraine. The average LNG price for April delivery into north-east Asia was estimated at $37.50 per metric million British thermal units, up $13.10, or 53.6 percent from the previous week, industry sources said.
Analysts said that it’s unsurprising that the invasion of Ukraine would be very bullish for spot gas prices, but the rise in crude oil prices also means long-term oil-linked LNG contracts will also rise.
Germany on Tuesday also halted certification of the Nord Stream 2 gas pipeline project which would double Russia’s pipeline export capacity via the Baltic Sea to Germany, prompting concerns about European gas supply.
Russia is Europe’s largest gas supplier. Europe is expected to be more reliant on LNG to cover any gap from a shortfall in either NS2 or Ukraine transit volumes. However, the global supply of liquified natural gas is tight and most of the volumes are locked into long-term contracts mostly to Asian buyers, so Europe and global buyers will have to compete for additional cargoes, further elevating prices.
