Oil prices increased on Monday over rising tensions in Eastern Europe with Russian forces on the brink of invading Ukraine, triggering fears that the move may lead to sanctions on Russia, the bloc’s top oil supplier.
International benchmark Brent crude was trading at $95.47 per barrel at 0621 GMT with a 1.09% rise after closing the previous session at $94.44 a barrel.
American benchmark West Texas Intermediate (WTI) traded at $94.34 per barrel at the same time for a 1.33% increase after ending the previous session at $93.10 a barrel.
Oil markets are already suffering from a tight supply and demand gap, as the world’s biggest oil producers of the OPEC+ group are experiencing difficulties in meeting their monthly production quotas.
Another fear is the decline in spare capacity since 2020, which the group may have difficulty in realizing within 30 days and sustaining for at least 90 days during an emergency.
Investors fear that should any disruptions in Eastern Europe emerge due to Russia-Ukraine tension, the market will be vulnerable to any supply disruptions because of low spare capacity levels, which would push prices higher.
Of the nearly 11 million barrels per day (bpd) of Russian oil produced in 2021, Europe imported some 4 million, according to the latest data of the International Energy Agency (IEA).
If disruptions occur in Eastern Europe, roughly 250,000 bpd of Russian oil exports transiting Ukraine via the southern branch of the Druzhba pipeline to supply Hungary, Slovakia and the Czech Republic is most immediately at risk. However, some 2.35 million bpd of Russian oil exports arrive in Europe through other pipelines and ports, according to data from the IEA.
If Russian oil supplies via the Druzhba pipeline are interrupted, as was the case in 2019 due to contaminated crude, the EIA said these countries would have to draw on emergency oil stocks and seek alternative supplies.
By Sibel Morrow