crude oil climbs against a backdrop of escalation in Ukraine

(Boursier.com) — Oil prices are rising quite significantly against a backdrop of worsening tensions between Russia and Ukraine, which relegates to secondary importance the impact of a larger than expected increase in American crude stocks this week passed. The barrel of Brent from the North Sea (due in January) advanced 1.9% to 74.2 dollars per barrel in London while American light crude gained 2% to 70.1 dollars on the Nymex.

Ukraine reported that Russia fired an intercontinental ballistic missile in an overnight attack on the central city of Dnipro, while a Kremlin spokesman called kyiv’s earlier use of British missiles a new escalation Stormshadow. This is the first time that Russia has used this type of long-range missile capable of carrying a powerful payload since the start of its large-scale invasion of Ukraine in February 2022.

“Geopolitics always has the potential to introduce volatility into the market and we have seen that with what is happening in Ukraine,” Themis Themistocleous, EMEA investment director at UBS Wealth Management, told ‘Bloomberg TV’. “We advise our clients to include oil in their portfolio, or oil derivatives, to be able to protect against potential volatility linked to geopolitics.”

On the bearish side, concerns about Chinese demand and a stronger dollar making dollar-priced commodities less attractive continue to weigh on the trend. The market is also expected to face a supply glut next year as investors wait to see whether OPEC+ will definitively reverse its plans to restart production. “We expect oil prices to test new lows next year as geopolitical risk subsides and bearish fundamentals gain more weight,” say Macquarie analysts cited by the ‘agency.