NEW YORK, Nov 18 (Reuters) – Oil prices surged more than $2 per barrel on Monday after a key production disruption at Norway’s Johan Sverdrup oilfield, combined with growing tensions from the ongoing Russia-Ukraine war.
Brent crude futures closed at $73.30 a barrel, up $2.26, or 3.2%. U.S. West Texas Intermediate (WTI) crude futures settled at $69.16 a barrel, rising $2.14, or 3.2%.
Equinor (EQNR.OL), the operator of the Johan Sverdrup field, confirmed the halt in production at the oilfield, the largest in Western Europe. The stoppage was triggered by an onshore power outage, with efforts already underway to restore output, though a timeline for the restart was not immediately available.
UBS analyst Giovanni Staunovo noted that the outage sparked concerns of a tighter crude supply in the North Sea, which directly influences Brent futures pricing.
Meanwhile, Kazakhstan’s Tengiz oil field, the country’s largest and operated by Chevron (CVX.N), also reported a significant reduction in output, cutting production by 28% to 30% due to ongoing repairs. The repairs are expected to be completed by Saturday, according to Kazakhstan’s energy ministry, further tightening global oil supplies.
The price rally was also fueled by heightened geopolitical risks linked to the Russia-Ukraine conflict. Over the weekend, a shift in U.S. policy allowed Ukraine to use U.S.-made weapons to strike deep into Russian territory, a move that escalated tensions.
In response, Russia’s government vowed retaliation, calling the decision by President Joe Biden’s administration “reckless” and warning that it could heighten the risk of conflict with NATO.
IG Markets analyst Tony Sycamore said that Biden’s approval of Ukraine’s long-range missile strikes on Russian forces around Kursk could amplify geopolitical concerns, particularly as North Korean troops have also become involved in the conflict.
Although Russian oil exports have not been significantly impacted by the war so far, MST Marquee energy analyst Saul Kavonic warned that oil prices could continue to climb if Ukraine targets more oil infrastructure in the future.
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