Oil Climbs as Traders Gauge War in Ukraine, Middle East Tensions

(Bloomberg) — Oil advanced as the war in Ukraine neared the end of its first month, and investors tracked geopolitical tensions in the Middle East.

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West Texas Intermediate rose above $106 a barrel in early trading after two weeks of declines. Turkey said Moscow and Kyiv were moving closer in negotiations to achieve a cease-fire and a diplomatic solution, even as a top Ukrainian aide said Russia has turned to “more destructive artillery” and Moscow demanded the surrender of the besieged city of Mariupol.

In the Middle East, Yemen’s Houthi rebels attacked at least six sites across Saudi Arabia late Saturday and early on Sunday, including some run by state oil giant Saudi Aramco. The Iran-backed group targeted an Aramco fuel depot in Jazan in the southwest of the kingdom and a natural gas plant in the Red Sea city of Yanbu, the official Saudi Press Agency reported.

The global oil market has been pitched into turmoil by Russia’s invasion of Ukraine, with the U.S. and Europe imposing sanctions on Moscow and crude buyers shunning the country’s cargoes. The U.S. oil benchmark topped $130 a barrel earlier this month to hit the highest since 2008, before easing.

The jump in crude prices and inflationary fallout has prompted leading oil importers to pressure producers to step up output. At the weekend, Japan urged the United Arab Emirates to increase exports, saying it “would like the UAE to contribute to the stabilization of the global crude oil market”.

Futures remain in backwardation, a bullish pattern marked by near-term prices commanding a premium to those further out. Brent’s prompt spread — the gap between its two nearest contracts — was $2.82 a barrel in backwardation. That compares with closes last week that ranged from $3.50 on Monday to $2.33 on Tuesday.