Oil supply shortage fears add to price volatility

Oil supply shortage fears add to price volatility

Renewed anxieties about global supply shortages are pushing oil prices higher again, the latest sharp moves in three weeks of extraordinary market volatility since Vladimir Putin ordered Russian tanks into Ukraine.

The international oil benchmark Brent crude settled at $107.93 a barrel on Friday, up more than 9 per cent for the preceding two sessions. The price was well below a $139 peak reached on March 7, but still about $10 a barrel more than before the Russian invasion.

Calculating the supply effect of punitive sanctions on Russia, the world’s largest exporter of crude and petroleum products, has been complicated by hopes for peace talks between Moscow and Kyiv and the possibility of eased restrictions on the oil exporters Venezuela and Iran. Lockdownsto contain a new surge of Covid-19 in China, the world’s largest petroleum importer, will diminish some consumption.

“Oil price volatility goes hand in hand with wars involving big oil producers,” said Bill Farren-Price, a director at Enverus, an energy consultancy.

“Supply risk is one thing, but doubts about demand pull the other way. The next big waymarkers will be Europe’s approach to Russian energy sanctions and the Iran nuclear talks, which could prompt a flood of Iranian oil. It’s a giant