Oil prices stabilize over softer-than-expected sanctions on Russia

By Sibel Morrow

ANKARA (AA) - Oil prices stabilized on Wednesday over the softer-than-expected sanctions imposed by Western countries on Russia, which excluded oil exports, in the backdrop of the threat of a full Russian invasion of Ukraine.

International benchmark Brent crude was trading at $93.59 per barrel at 0654 GMT with a 0.27% decrease after closing the previous session at $93.85 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $91.70 per barrel at the same time for a 0.22% loss after it ended the previous session at $91.91 a barrel.

Reports over the ongoing tension in Ukraine after Russia called its recognition of two breakaway regions of the country continue to support a higher price trajectory, which some experts foresee reaching over $100 per barrel in time.

The UK, US and Japan on Tuesday announced sanctions against Russia, and Germany said it would freeze the Nord Stream 2 gas pipeline project, which was designed to double the flow of Russian gas directly to Germany.

"On the heels of Russia's incursion into Ukraine comes additional drone attacks on Saudi, putting additional upward pressure on oil prices," said Randall Mohammed, a financial representative of US-based Northwestern Mutual and energy market commentator.

Mohammed said although the attack was not on any oil infrastructure, an attack on OPEC's largest producer would trigger volatility as “an attack on soft targets killing civilians is a blatant violation of international law and no doubt would be met with a military response.”

- Iran ready to compensate if any Russian gas supplied is hindered

In support of limiting further price jumps, Iran's President Ebrahim Raisi declared on Tuesday his country's readiness to supply natural gas to the world, including Europe.

Addressing the sixth summit of the Gas Exporting Countries Forum (GECF) in Qatar’s capital Doha, Raisi said that Iran, one of the world’s biggest holders of natural gas reserves, has the capacity to supply gas to the world, and called on the international community to support initiatives aimed at ensuring the security of the global energy market.

The ongoing talks on the Iran nuclear deal, the likely positive outcome of which would lead to higher Iranian oil exports, also contributed to the easing of market tightness.

Meanwhile, the International Energy Agency (IEA) said most immediately at risk are roughly 250,000 barrels per day of Russian oil exports transiting Ukraine via the southern branch of the Druzhba pipeline to supply Hungary, Slovakia and the Czech Republic.

The agency also noted that these countries have “ample” government-held emergency stocks to draw upon should the need arise.

Experts say panic and disruption in markets are possible if severe financial and economic sanctions are placed on Russia even if oil exports are not explicitly targeted by Western sanctions.