Oil Steadies as U.S. Mulls SPR Release to Quell Russia Concerns

(C) Reuters. Oil Steadies as U.S. Mulls SPR Release to Quell Russia Concerns

(Bloomberg) — Oil steadied as investors focused on the possible release of strategic crude reserves by the U.S. and its allies to ease supply fears after Russia was slapped with more sanctions over its invasion of Ukraine.

Futures in New York dipped in early trading after surging 4.5% Monday as Western sanctions on Russia rippled through the market. Banks are stopping commodity financing and buyers are shunning the nation’s flagship Urals crude, with some looking to the Middle East for extra barrels. The U.S. and others are considering a release of 60 million barrels, according to people familiar.

See also: Exxon (NYSE:XOM) Faces Stark Choice After Rivals BP (NYSE:BP), Shell (LON:RDSa) Abandon Russia

The invasion of Ukraine has upended financial and commodity markets from energy to metals and grains, increasing inflationary pressure on governments seeking to encourage economic growth after the pandemic. That’s so far led to nations avoiding sanctions on energy exports from Russia, the world’s third-biggest oil producer and a key member of the OPEC+ alliance.

The turmoil sparked by the invasion is likely to make the task of balancing the tightening market harder for OPEC+, which meets Wednesday to discuss output policy. However, delegates said the cartel will probably stick to its plan of only gradually increasing supply. The group’s Joint Technical Committee meets Tuesday, which analyzes the market on behalf of ministers.

Talks on the coordinated release are currently focused on tapping 30 million barrels from the U.S. Strategic Petroleum Reserve and an equivalent amount from a group of other countries, according to three people familiar with the matter. No decisions have been made and the discussions could continue for several more days, with the U.S. coordinating with other members of the International Energy Agency, the people said.

(C)2022 Bloomberg L.P.

Oil Steadies as U.S. Mulls SPR Release to Quell Russia Concerns

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