Both major benchmarks extended gains today, with Russia revealing peace talks with Ukraine had reached a dead end – intensifying investor concerns about tight supplies.
Brent Crude prices surged 2.64 per cent to $107.40 per barrel, while WTI Crude surged 2.32 per cent to $102.93.
This follows six per cent gains yesterday in the previous session.
Alongside the reduced likelihood of conflict in Ukraine concluding any time soon, the International Energy Agency (IEA) said it expected Russian oil output losses to average 1.5m barrels per day in April, with losses growing to close to 3m barrels per day from May.
Markets are already tight from OPEC+ persistently failing to reach raised output targets in recent months – despite only modest pledges to boost production by an extra 400,000 barrels per day.
Meanwhile, Russian oil and gas condensate production has fell below 10m barrels per day, its lowest since July 2020.
These factors are feeding worries about tight supplies even after US crude stocks rose by more than 9m barrels, and the IEA and US pledged to flood the market with 240m barrels from strategic reserves.
OANDA’s senior market analyst Craig Erlam said: “Longer-term, the market remains very tight and with plenty of upside risks in the price. Russian output remains a source of uncertainty given the impact of the war in Ukraine on its exports. While the reluctance of OPEC+ to significantly raise output – well, those within the group that can – isn’t helping ease the pressures in the market.”