December 22, 2024

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Oil Prices Set for Weekly Gain as War Premium Jumps

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Irina Slav

Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry.

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Oil Prices Set for Weekly Gain as War Premium Jumps

Crude oil prices extended their gains today and were set to end the week higher after Russia shot a new kind of ballistic missile at Ukraine in the latest sign that the escalation there continues.

The strike, featuring a hypersonic medium-range missile that has not been used before in warfare, came in response to a Ukrainian attack with U.S. and British ATACMS missiles on Russian territory. There were fears that Russia would escalate to using nuclear weapons, especially after President Vladimir Putin this week reiterated the changes in Russia’s nuclear doctrine, which stipulate that a nuclear strike is acceptable on a country that is not itself a nuclear power but is being supported by a nuclear power.

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“There’s an element of uncertainty as to how far each party could go in its attacks, which is injecting some anxiety into the oil market,” energy analyst Vandana Hari told Bloomberg.

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At the time of writing, Brent crude was trading at $74.34 per barrel, with West Texas Intermediate at $70.23 per barrel, both up on Thursday, after booking a 2% rise on Thursday. The price rise could have been more substantial, perhaps, had it not been for the latest EIA weekly petroleum status report, which showed builds in both crude oil and fuels.

“We will be expecting a rebound in production as well as US refinery activity next week that will carry negative implications for both crude and key products,” Jim Ritterbusch from Ritterbusch and Associates told Reuters.

In a note from earlier this week, ING’s Warren Patterson and Ewa Manthey wrote that the impact of the Russian-Ukrainian escalation on oil prices was muted by the news that Iran was ready to cap its enriched uranium stocks, which would reduce the risk of harsher U.S. sanctions that would threaten supply security. They also noted the return to normal operation at the Johan Sverdrup field in Norway after a short suspension due to a power outage.

By Irina Slav for Oilprice.com

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