Oil prices gain on rising Russia-Ukraine tensions

Crude oil prices marched higher Monday as traders kept a wary eye on escalating tensions between Russia and Ukraine and the prospects of resumed Libyan oil exports.

US benchmark West Texas Intermediate (WTI) for delivery in May finished the trading session at $104.05 a barrel, a gain of 31 cents from Friday’s close.

Brent North Sea crude for May jumped $1.74 to settle at $109.07 a barrel in London.

The benchmark WTI futures contract traded in a narrow band of about $1, said James Williams of WTRG Economics.

“Investors are hesitant given the uncertainty about Ukraine and about when and how much of the Libyan production is going to come back,” Williams said.

Tensions mounted over Ukraine, which declared a “full-scale” military operation against pro-Russian forces amid deadly clashes in its restive, largely Russian-speaking east.

Pro-Russian insurgents gained more ground Monday in eastern Ukraine, a tinderbox of separatist sentiment since pro-Western protests ousted Ukraine’s Kremlin-backed government in February.

Russia annexed Ukraine’s Crimea region last month.

“Rising tensions in eastern Ukraine and Russia have helped support the gains in Brent and WTI prices,” CMC Markets analyst Desmond Chua told AFP.

With Ukraine a key conduit for Russian gas to Europe, traders are concerned that any full-scale armed conflict will disrupt supplies and send oil and gas prices skyrocketing.

Chua said dealers were also keeping a close watch on Libya after its prime minister, Abdullah al-Thani, stepped down Sunday, saying that he and his family had been victims of an armed attack the previous day.

Chua said the move “caused a stir in Brent” — the benchmark futures contract used in pricing Middle Eastern crude.

The resignation came as traders also were watching Libya, a member of oil-producing cartel OPEC, after the government reached a deal with rebels to reopen shuttered terminals.

“A deal to reopen Libyan oil ports has yet to produce any exports and some are still skeptical that all is well in Libya,” said Phil Flynn of Price Futures Group.

Rebels’ seizure of four eastern oil terminals in July in a bid for restored autonomy for the eastern Cyrenaica region slashed output from 1.5 million barrels per day to just 250,000.

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