Oil prices rise on supply disruptions, fears of escalation in Russia-Ukraine war

Oil prices rose on Tuesday amid fears of an escalation in the Russia-Ukraine war and a halt to production at Norway’s Johan Sverdrup oil field.

Brent crude futures for January delivery rose 15 cents, or 0.2%, to $73.45 a barrel by 0430 GMT, while WTI crude futures rose 15 cents, or 0.2%, to $69.31 a barrel. The more active WTI January contract rose 13 cents, or 0.2%, to $69.30.

Norway’s Johan Sverdrup oil field, the largest in Western Europe, said it had halted production because of an onshore power outage. An Equinor spokesman said efforts to restart production were underway but it was not yet clear when it would resume.

Separately, Kazakhstan’s largest oil field, Tengiz, operated by US major Chevron, has seen its oil output cut by 28% to 30% due to repairs, helping to tighten global supplies further. The country’s energy ministry said the repairs were expected to be completed by Saturday.

A power outage at the 755,000-barrel-per-day Johan Sverdrup field in Norway and a drop in production at the Tengiz field in Kazakhstan also helped push prices higher.

Geopolitical risks between Russia and Ukraine have also risen after the US said Ukraine had allowed it to launch long-range missile strikes on Russia.

Russia launched its biggest airstrike on Ukraine in nearly three months on Sunday, severely damaging the country’s power system.

The Kremlin said on Monday that Russia would respond to what it called a reckless decision by the Biden administration. Putin had previously warned that such a move would increase the risk of a conflict with the US-led NATO alliance.

Investors are cautious and assessing the course of the Russia-Ukraine war after the weekend escalation. Meanwhile, they have begun shifting WTI trades to the January contract ahead of the December contract expiration on Wednesday.

WTI returned to contango for the first time since February on Monday, with January delivery trading at a premium to the December contract in a sign that the supply crunch is easing.

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