Oil prices rise as Norway halts output and Russia-Ukraine tensions intensify
Shafaq News/ Oil prices edged up onTuesday, extending the previous day's rally driven by a halt in production atNorway's Johan Sverdrup oilfield, though investors remained cautious amid fearsof an escalation in the Russia-Ukraine war.
Brent crude futures for Januarydelivery rose 15 cents, or 0.2%, to $73.45 a barrel by 0430 GMT, while U.S.West Texas Intermediate crude futures for December delivery were at $69.31 abarrel, up 15 cents, or 0.2%. The more active WTI January contract rose 13cents, or 0.2%, to $69.30.
Both benchmarks climbed more than $2a barrel on Monday after Norway's Equinor said it has halted output from itsJohan Sverdrup oilfield, Western Europe's largest, due to an onshore poweroutage.
Work to restart production was underway, an Equinor spokesperson said, but it was not immediately clear when itwould resume.
Additionally, Kazakhstan's biggestoil field Tengiz, operated by U.S. major Chevron, has reduced oil output by 28%to 30% due to repairs, helping to further tighten global supplies. Repairs wereexpected to be completed by Saturday, the country's energy ministry said.
"A halt of production at the755,000 barrels per day Johan Sverdrup field in Norway due to a power outage,and a drop in production at the Tengiz field in Kazakhstan provided furtherupside," said ING analysts in a note.
"In addition, geopoliticalrisks between Russia and Ukraine have increased after the U.S. said it wouldallow Ukraine to carry out long-range missile strikes on Russia."
Russia had unleashed its largestairstrike on Ukraine in almost three months on Sunday, causing severe damage tothe country's power system.
In a significant reversal ofWashington's policy, President Joe Biden's administration allowed Ukraine touse U.S.-made weapons to strike deep into Russia, two U.S. officials and asource familiar with the decision said on Sunday.
The Kremlin said on Monday thatRussia would respond to what it called a reckless decision by the Bidenadministration, having previously warned that such a decision would raise therisk of a confrontation with the U.S.-led NATO alliance.
Investors are wary, said ToshitakaTazawa, an analyst at Fujitomi Securities, "assessing the direction of theRussia-Ukraine war after the weekend's escalation."
Meanwhile, traders began shiftingWTI trades to the January contract ahead of the expiration of the Decembercontract on Wednesday.
WTI flipped to contango for thefirst time since February on Monday, with January delivery trading at a premiumto the December contract in a sign that supply tightness was easing.
(REUTERS)
