Oil futures jumped Tuesday, with the U.S. benchmark hitting a seven-year high above $101 a barrel, as Russia’s invasion of Ukraine entered a sixth day and Western sanctions against Moscow were seen disrupting supply despite an effort to exempt energy flows.
West Texas Intermediate crude for April delivery
was up $5.20, or 5.4%, to $100.94 a barrel on the New York Mercantile Exchange after hitting an intraday high at $101.53.
May Brent crude
the global benchmark, was up $5.09, or 5.2%, at $103.09 a barrel on ICE Futures Europe.
Shelling by Russian forces continued to pound civilian targets in Kharkiv, Ukraine’s second-largest city, on Tuesday, according to news reports, as satellite images showed a 40-mile convoy of Russian tanks and other military vehicles advancing on Kyiv, the capital.
Western nations over the weekend and on Monday put additional sanctions on Moscow, blocking selected Russian banks from the SWIFT interbank messaging system and taking aim at the country’s central bank in an effort to impede its ability to access foreign-exchange reserves. The moves, however, were designed to exempt energy flows form Russia, a major producer of oil and natural gas.
But analysts said the sanctions appeared to nevertheless undercut demand for Russian commodities.
Commodities consumers are increasingly reluctant “to buy oil, liquefied natural gas, coal, metals and grains from Russia due to the uncertain legal situation,” said Carsten Fritsch, commodity analyst at Commerzbank, in a note.
“The fact that several Russian banks have been excluded from the international SWIFT payment system makes paying for deliveries more difficult. Furthermore, Western banks are refusing to finance the transactions,” he wrote. “The tense security situation in the Black Sea region means that insurance companies are no longer willing to insure shipments or are demanding much higher premiums to do so.”
Traders were also watching out for the possibility of a coordinated release of strategic oil reserves by the U.S. and other countries. News reports have said a release of 60 million to 70 million barrels of crude by member countries of the Paris-based International Energy Agency could come as early as Tuesday.