Oil Up, Jumps as Chances of Ukraine Conflict Resolution Fall

© Reuters.

By Gina Lee

AiVIF.com – Oil was up on Friday morning in Asia, extending its rally at the end of a third volatile week. The slim chance of progress in ceasefire talks between Ukraine and Russia raised the possibility of tighter sanctions and continued disruption to oil supply.

Brent oil futures rose 2.65% to $109.47 by 11:58 PM ET (3:58 AM GMT), after climbing nearly 9% on Thursday in the largest percentage gain since mid-2020. WTI futures jumped 2.86% to 105.93 after an 8% jump during the previous day. However, both Brent and WTI futures were set to end the week down about 4%, after trading in a $16 range. The black liquid also dropped from the 14-year highs hit nearly two weeks ago.

Russian President Vladimir Putin on Thursday warned "traitors and scum" at home who helped the West that they would be spat out like gnats, which added to concerns that the conflict stemming from Russia’s invasion of Ukraine on Feb. 24 will drag on.

Putin's comments, alongside comments from a Russian spokesperson saying a report of major progress in peace talks was "wrong" and U.S. President Joe Biden calling Putin a "war criminal", all drove a wave of buying on Thursday, according to some analysts.

"I'm still expecting more volatility. There's a lot of uncertainty out there still," Westpac senior economist Justin Smirk told Reuters.

This recent volatility has scared players out of the oil market, which in turn is likely to exacerbate price swings, traders, according to bankers and analysts.

Western sanctions on Russia, alongside stalled talks to revive a 2015 nuclear deal with Iran, falling oil stockpiles, and the latest COVID-19 outbreak in China are all adding to the market’s volatility.

"In such a tight market and such an illiquid paper market, you're going to get some volatility," said Smirk.