Oil up on growing worries over risk to Russian supplies

By Sibel Morrow

ANKARA (AA) - Oil prices increased on Friday over rising tension in Ukraine after reports of an attack on the country’s nuclear facilities, although gains were capped by growing prospects of a positive result in ongoing Iran talks, which if successful, would relieve the market with the promise of more supply.

International benchmark Brent crude was trading at $111.78 per barrel at 0706 GMT for a 1.19% gain after closing the previous session at $110.46 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $109.24 per barrel at the same time for a 1.45% increase after the previous session closed at $107.67 a barrel.

Oil prices swayed in a wide range Thursday when Brent oil price hit its highest level since May 2012 and WTI also saw highs not seen since September 2008, rising to $119.78 a barrel and $112.93 a barrel, respectively.

Prices started rallying again after a huge explosion was heard early Friday in Ukraine’s capital Kyiv, as the war launched by Russia entered its ninth day.

Ukrainian Foreign Minister Dmytro Kuleba said early Friday that Russia is firing on the Zaporizhzhia nuclear power plant (NPP), the largest in Europe.

“The Russian army is firing from all sides upon Zaporizhzhia NPP, the largest nuclear power plant in Europe. Fire has already broken out,” said Kuleba, adding, “If it blows up, it will be 10 times larger than Chernobyl!”

Located in the steppe zone of Ukraine on the banks of the Kakhovka Water Reservoir, the Zaporizhzhia NPP in Enerhodar is the largest in Europe and among the top 10 largest in the world.

Last month, Ukraine had said it also lost control of the Chernobyl NPP in the north of the country after a fierce battle with Russian forces.

Ukraine has 15 operational nuclear reactors at four sites throughout the country, providing roughly half of its electricity. The State Nuclear Regulatory Inspectorate of Ukraine confirmed Thursday that they were operating normally.

The ongoing Russia-Ukraine war and its possible impact on Russian oil and gas supplies add to oil market concerns over decreasing supply and depleting global spare capacity.

Reports have emerged of some oil companies imposing self-sanctioning by refraining from buying Russian oil to avoid exposure to any Russian entities.

Iranian oil is the most immediate solution to alleviate these supply worries. However, talks that will enable the country to start oil exports have not yielded a positive result yet.

The head of the International Atomic Energy Agency (IAEA), Rafael Mariano Grossi, is expected to visit Tehran on Saturday, Iranian news outlet IRNA said, citing the IAEA, raising the prospect of progress on the revival of the 2015 Iran nuclear deal.