Brent crude oil rose by around $1.50 yesterday as western powers considered tougher sanctions against Russia over its actions in Ukraine.
Several European Union foreign ministers threatened Moscow with new sanctions. France’s foreign minister said the group could hold an emergency summit next week if there is no breakthrough in talks involving Russia, Ukraine and the US scheduled for Thursday.
Brent prices rose by as much as $1.79 early in the day after the Pentagon announced a Russian fighter aircraft made low-altitude, close-range passes near a US ship in the Black Sea over the weekend.
In Ukraine, pro-Russian separatists continued to occupy government buildings in the eastern part of the country while another group of rebels attacked a police HQ as a military offensive threatened by the interim president in Kiev failed to materialise.
The US said it was prepared to step up sanctions against Russia, a major exporter of crude oil to Europe and Asia, if the separatist action continued.
US crude rose modestly after positive retail sales data signalled a rebound in the US economy.
Limiting gains across the global oil complex was the gradual reopening of several Libyan oil ports that had been blockaded by protesting rebel groups since last July.
In Libya, the western Zawiya oil port was operating normally after protesters vacated the entrance to the facility and the adjoining refinery reopened, developments that had briefly pushed oil into negative territory. However, the eastern Zueitina oil port was still not under government control one week after an agreement with rebel groups to reopen it along with the Hariga terminal.
An almost complete cut in Libyan supply from around 1.4million barrels per day under the previous government has underpinned prices for nearly 10 months, but the port reopenings could enable a substantial recovery in exports.
“The geopolitical tensions are underlying the support in both Brent and US crude,” said Andrew Lipow, president of Lipow Oil Associates in Texas. He said Libyan exports could threaten prices, but “the general market feeling is ‘show me the oil’ before we believe progress is being made.”
Brent crude was up $1.46 at $108.77 a barrel near the close of UK markets last night.
US oil rose 28 cents to $104.02 a barrel.