Oil prices ended the week mixed on Friday as investors weighed potential
supply disruptions from the Russia-Ukraine crisis against the prospect of
increasing Iranian oil exports.
Quoting Reuters on Saturday (19/2), Brent crude futures were up 57 cents, or
0.6%, higher at $93.54 a barrel, while U.S. West Texas Intermediate (WTI)
crude ended down 69 cents, or 0.5%, at US$ 91.07 per barrel. US markets will
be closed on Monday for the President's Day holiday.
Both benchmarks hit their highest levels since September 2014 on Monday, but
increasing prospects of easing oil sanctions on Iran have weighed on
markets.
Brent posted a small 0.9% gain in its ninth weekly gain, while WTI is down
1.7% this week, snapping an eight-week rally.
Concerns over possible supply disruptions due to Russia's military presence
on the Ukrainian border limited this week's losses.
The West has threatened Russia, a major oil and gas supplier, with new
sanctions if it attacks Ukraine; Russia denies planning any attacks.
Any sanctions that may be imposed on Russia by the European Union should not
include energy imports, Italian Prime Minister Mario Draghi said.
Oil markets rose slightly in after-hours trading after US President Joe
Biden said he believed Russian President Vladimir Putin had made the
decision to attack Ukraine in the coming days.
A senior EU official said a US-Iran deal to revive Iran's 2015 nuclear deal
with world powers was imminent but success depended on the political will of
those involved.
However, the agreement formed lays out a phased joint move to bring the two
sides back to full compliance, and the former does not include oil sanctions
waivers, diplomats said.
As a result, there is little chance of Iranian crude returning to the market
any time soon to ease the current tight supply, analysts said.
Reflecting tight global oil supplies, the six-month lag in Brent hit its
widest on record on Wednesday.
Backwardation is a market structure that occurs when contracts for
short-term delivery are priced higher than contracts for subsequent months.
OPEC+, which consists of the Organization of the Petroleum Exporting
Countries and its allies including Russia, will work to integrate Iran into
its oil production pact if Tehran and world powers reach a deal to revive
their nuclear deal, sources close to the group said.
Adding to pressure on WTI, US drillers added four oil rigs this week, with
the rig count, an indication of future production, rising to 520, the
highest since April 2020, energy services firm Baker Hughes said.
