(Bloomberg) — Oil surged for a third day as the war in Ukraine neared the end of its first month with no conclusion in sight, while attacks by Iranian-backed rebels on energy facilities in Saudi Arabia added to upward pressure.
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West Texas Intermediate topped $108 a barrel, and the U.S. benchmark has rallied almost 14% since the close last Wednesday. A top Ukrainian aide said Russia has turned to “more destructive artillery” as the country rejected a demand to surrender the besieged southern port city of Mariupol. Still, Turkey said Moscow and Kyiv were moving closer in talks to achieve a cease-fire.
The global oil market has been pitched into turmoil by Russia’s invasion of Ukraine, with the U.S. and Europe imposing sanctions on Moscow and crude buyers shunning the country’s cargoes. WTI topped $130 a barrel earlier this month to hit the highest since 2008, before easing. Prices have seen unprecedented volatility, with frequent intraday swings of about $10.
The Biden administration is stepping up its response to Russia’s invasion. Later Monday, officials will brief energy companies including Exxon Mobil Corp. as well as banks on the war and ensuing sanctions. Separately, President Joe Biden will call counterparts in Europe, then travel to the region later this week.
Yemen’s Houthi rebels attacked at least six sites across Saudi Arabia late Saturday and early Sunday, including some run by oil giant Saudi Aramco. The Iran-backed group targeted a fuel depot in Jazan in the southwest of the kingdom and a natural gas plant in the Red Sea city of Yanbu.
With hostilities in Ukraine continuing, the world’s three biggest oilfield-service providers are scaling back work in Russia. On Saturday, Baker Hughes Co. said it’s suspending new investments in local operations. That followed a similar statement by Schlumberger on Friday. Halliburton Co., the top provider of fracking services, has halted current and future work in the country.
Futures moved deeper into backwardation, a bullish pattern with near-term prices above those further out. Brent’s prompt spread — the gap between its two nearest contracts — was $3.05 a barrel, up from $2.86 on Friday.
The rally in oil prices has spurred importers to pressure producers to step up supply, including members of the Organization of Petroleum Exporting Countries. At the weekend, Japan urged the United Arab Emirates to increase exports. Meanwhile, Saudi Aramco will raise spending as oil’s surge bolsters a plan to boost output.
Traders are also tracking China’s efforts to contain its latest Covid-19 outbreak and the implications for energy demand. President Xi Jinping has pledged to reduce the economic impact of strict containment measures, while reiterating a commitment to a Covid-Zero policy. Last week, China reported its first Covid-19 deaths since January 2021 and new infections in Shanghai hit a record.
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