Crude prices drop despite rising tensions over Ukraine

17th March 2014, Comments 0 comments

Oil prices fell Monday as markets downplayed fears of disruptions to Western European energy supplies after Crimea voted in a disputed referendum to leave Ukraine and join Russia.

New York's main contract, West Texas Intermediate for delivery in April, shed $1.27 to $97.62 a barrel compared with Friday's close.

Brent North Sea crude for May delivery slid $1.52 to stand at $106.69 in London afternoon deals.

The referendum outcome "was already priced in while news that the potential sanctions could be against the Russian government rather than businesses has further calmed the nerves", said Fawad Razaqzada, analyst at traders FOREX.com.

"After all, it is not in Europe's interests to impose restrictions on Russian energy exports given the fact that they supply about a third of the EU's oil and gas needs."

The European Union and the United States on Monday slapped sanctions on top Russians and Ukrainians deemed responsible for a breakaway vote in Crimea that has fanned the worst East-West standoff since the Cold War.

EU foreign ministers unveiled travel bans and asset freezes against 13 Russian officials and eight Ukrainian officials from Crimea.

Crimea's separatist authorities meanwhile moved against energy companies in their first nationalisations after deciding all Ukrainian state property would be transferred into Crimean ownership.

Despite the escalation in tensions, analysts downplayed risks to energy supplies through Russia to Western Europe.

"Clearly nobody expects the oil and gas sectors to be affected, as the negative economic consequences would simply be too serious for both sides," said Commerzbank analyst Carsten Fritsch.

Traders were meanwhile awaiting the Federal Reserve's policy meeting due this week, with the US central bank expected to further cut its economic stimulus programme as the economy shows further signs of recovery.

The health of the US economy is a key influence on oil prices as the United States is the world's biggest oil consuming nation.

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© 2014 AFP

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