Oil costs settle up 1% at 2-week excessive as Ukraine warfare intensifies

By Scott DiSavino

(Reuters) -Oil costs climbed about 1% on Friday, settling at a two-week excessive, because the intensifying warfare in Ukraine this week boosted the market’s geopolitical danger premium.

Brent (LCOc1) futures rose 94 cents, or 1.3%, to settle at $75.17 a barrel. U.S. West Texas Intermediate (WTI) crude rose $1.14, or 1.6%, to settle at $71.24.

Each crude benchmarks had been up about 6% for the week, their highest settlements since Nov. 7 as Moscow stepped up its Ukraine offensive after Britain and the U.S. allowed Kyiv to strike deeper into Russia with their missiles.

“The Russia-Ukraine escalation has raised geopolitical tensions past ranges seen in the course of the year-long battle between Israel and Iran-backed militants,” mentioned Saxo Financial institution analyst Ole Hansen.

President Vladimir Putin mentioned Russia would maintain testing its new Oreshnik hypersonic missile in fight and had a inventory prepared to be used. Russia fired the missile into Ukraine, prompted by Ukraine’s use of U.S. ballistic missiles and British cruise missiles to hit Russia.

“What the market fears is unintentional destruction in any a part of oil, gasoline and refining that not solely causes long-term harm however accelerates a warfare spiral,” mentioned PVM analyst John Evans.

The U.S., in the meantime, imposed new sanctions on Russia’s Gazprombank as President Joe Biden stepped up actions to punish Moscow for its invasion of Ukraine earlier than he leaves workplace on Jan. 20.

The Kremlin mentioned the brand new U.S. sanctions had been an try by Washington to hinder the export of Russian gasoline, however famous {that a} resolution could be discovered.

The U.S. additionally banned meals, metals and different imports from about 30 extra Chinese language corporations over alleged pressured labor involving the Uyghurs.

China, the world’s greatest oil importer, introduced coverage measures this week to spice up commerce, together with help for vitality product imports, amid worries over U.S. President-elect Donald Trump’s threats to impose tariffs.

China’s crude oil imports had been set to rebound in November, based on analysts, merchants and ship monitoring knowledge.

Oil imports additionally elevated in India, the world’s third greatest oil importer, as home consumption elevated, based on authorities knowledge.

CAPPING PRICE GAINS

Pressuring costs on Friday, euro zone enterprise exercise took a surprisingly sharp flip for the more serious this month because the bloc’s dominant providers business contracted and manufacturing sank deeper into recession.

In distinction, S&P International mentioned its flash U.S. Composite PMI Output Index, which tracks the manufacturing and providers sectors, elevated to the best stage since April 2022, with the providers sector offering the majority of the rise.

However with these enterprise exercise gauges shifting in reverse instructions within the U.S. and Europe, the U.S. greenback jumped to a two-year excessive versus a basket of different currencies.

A stronger dollar makes oil costlier in different nations, which may scale back demand.

In Germany, the largest economic system in Europe, the economic system grew lower than beforehand estimated within the third quarter, the statistics workplace reported on Friday.