Crude Oil prices soared on Monday, rising nearly 7.5%, as the European Union governments consider whether or not to join the USA and to impose an oil embargo on Russia over its invasion of Ukraine.
After a volatile couple of weeks for the commodity, the price of crude bounced back from a two-week low to jump above $112 a barrel.
On Sunday, Yemen’s rebels launched a series of attacks targeting Saudi Arabia’s oil and natural gas production facilities. Drone and missile strikes fired from Yemen started a fire at a tank at a petroleum distribution in the Saudi port city of Jiddah and impacted production at the gas facility in Yanbu
Commodity markets opened in Asia with immediate losses, down 3% in early the early trading session. Oil prices jumped even higher in the European and North American trading sessions after Russia-Ukraine talks appeared to make no sign of progress, causing markets further concern over an already tight supply, which has prompted a call by the International Energy Agency for a global reduction in oil demand.
Oil prices have also been sensitive to talk of Hong Kong lifting COVID-19 restrictions, which as a major manufacturer would increase demand.
ANZ Research analysts Brian Martin and Daniel Hynes wrote in a note on Monday:
“The breakdown of peace talks between Russia and Ukraine saw crude oil prices extend their rebound on Friday,”
“However, it failed to offset the losses earlier in the week, with Brent crude ending down more than 4%.”
Now, With little sign of the conflict easing, investor focus has now returned to whether the markets can replace Russian oil barrels hit by sanctions and whether or not the EU will impose further sanctions.
