Oil rose to its highest since 2014 on Tuesday after Moscow ordered troops into two breakaway regions in eastern Ukraine, tempered by a declaration from Germany's chancellor that the nation would not certify the $11 billion (€9.7bn) Nord Stream 2 pipeline.
Germany put the certification of the Nord Stream 2 gas pipeline from Russia on ice, while the United States and European Union discussed potential sanctions as Ukraine reported continued shelling in east Ukraine.
“Markets are viewing the situation as a de-escalation of the crisis, and are hopeful conflict ends here,” said Bob Yawger, director of energy futures at Mizuho.
Brent crude, the global benchmark, reached its highest since September 2014 at $99.50 in early trading, but eased back from their highs as the session progressed to stand at around $97 by the time European financial markets had closed.
The Ukraine crisis has added further support to an oil market that has surged on tight supplies as demand recovers from the Covid-19 pandemic. The Organization of the Petroleum Exporting Countries (Opec) and allies, together known as Opec+, have resisted calls to boost supply more rapidly.
A senior British minister said Russia’s move into Ukraine has created a situation as grave as the 1962 Cuban missile crisis, when a confrontation between the United States and Soviet Union brought the world to the brink of nuclear war.
Nigeria’s minister of state for petroleum on Tuesday stuck to the Opec+ view that more supply was not needed, citing the prospect of more production from Iran if its nuclear deal with world powers is revived.
Talks are ongoing on renewing Iran’s nuclear agreement with world powers, which could eventually boost Iran’s oil exports by more than 1 million barrels per day.
Travel shares
Over on the stock market European shares ended flat on Tuesday as gains in auto and travel shares were offset by geopolitical risks, with some Western countries imposing sanctions on Russia after it ordered troops into two breakaway regions of eastern Ukraine.
The pan-European Stoxx 600 index was flat, with automakers, travel stocks and technology shares the top gaining sub-indexes, while retailers and financial stocks were among the biggest losers.
In Dublin, Tullow Oil advanced 4.8 per cent to 65c as sector followers monitored movements on the commodities markets.
Ryanair also moved ahead, closing 1.15 per cent higher at €16.34. The flag carrier has almost fully hedged its fuel needs for its financial year to the end of March at a significant discount to current market prices.
– Reuters, Bloomberg
