Crude oil futures rise amid Ukraine, Middle East tensions

Crude oil futures were higher in mid-morning trade in Asia Jan. 18, as investors remained upbeat on the outlook for oil, while geopolitical tensions in the Ukraine and Middle East kept market watchers on their toes.

At 10:14 am Singapore time (0214 GMT), the ICE March Brent futures contract was up 47 cents/b (0.54%) from the previous close at $86.95/b, while the NYMEX February light sweet crude contract rose 83 cents/b (0.99%) from the Jan. 14 close at $84.65/b.

US markets were closed for a holiday Jan. 17.

After briefly dipping into negative territory in the intra-day Asian session Jan. 17, the front-month ICE Brent crude contract managed to pull away to settle 0.5% higher overnight. Crude prices have now added close to 12% in value since the start of the year.

Geopolitical risks were on investors' radar this week after reports of Yemeni Houthi rebels launching an attack Jan. 17 on ADNOC's storage facilities and the international airport in the UAE.

Tensions in the Russia-Ukraine crisis meanwhile remained high, with Poland's foreign minister saying late in the week ended Jan. 14 that the region was at risk of plunging into war.

Several analysts had said in an S&P Global Platts podcast Jan. 10 that an outbreak of war on the Russia-Ukraine front could potentially send oil prices to $100/b.

"This growing geopolitical risk [in the Middle East] comes at a time when there is already plenty of concern in the market over the potential impact of an escalation in tensions between Russia and Ukraine. These growing risks, combined with worries over OPEC spare capacity, have meant that sentiment in the oil market has remained bullish," said ING analysts Warren Patterson and Wenyu Yao in a Jan. 18 note.

Several OPEC members continue to struggle to raise output to their required quota levels. Saudi Arabia's Energy Minister Prince Abdulaziz bin Salman said at a conference Jan. 17 that the country does not plan to pump more crude beyond its quota to make up for other OPEC+ members' production shortfalls despite increasingly tight spare output capacity among the group.

However, UAE Energy Minister Suhail al-Mazrouei said in the same conference that OPEC+ alliance would ensure no supply squeeze in the market to maintain stable prices.

A Platts survey in the week ended Jan. 14 found total OPEC+ quota compliance climbed to 116.5% in December, the highest since the alliance instituted record output cuts in spring 2020, with the 19 members subject to production targets pumping some 620,000 b/d below their combined caps.