Oil slipped after market hours on news that the U.S. is considering a potential release from its oil reserves in coordination with allies. 

Futures in New York closed up 0.2 per cent, before slipping. The Biden administration is considering tapping its emergency supply of oil again in coordination with allies to counter a surge in prices brought on by Russia’s moves against Ukraine, according to two people familiar with the matter. Earlier in the day, crude swung throughout the session with markets focused on ongoing Russia-Ukraine tensions while weighing a potential conclusion to nuclear talks with Iran, which could add supply to the market. 

Earlier, Ukraine said several government and bank websites are not functioning due to a distributed denial-of-service attack government. Last week, Ukraine said it suffered its wost DDoS attack in its history. 

On Tuesday, U.S. President Joe Biden announced sanctions targeting Russia’s sale of sovereign debt abroad and the country’s elites, responding to what he described as the start of an invasion of Ukraine, but avoided a sweeping package of penalties.

Headline crude prices have been subject to wild swings over the last week amid conflicting geopolitical headlines from Ukraine and the Iran nuclear talks. As tensions in Ukraine add to the risk of supply disruptions, the International Energy Agency said its members are ready to act to ensure global oil markets are adequately supplied. 

Assuming Russian escalation is coupled with an Iranian deal, JPMorgan Chase & Co. said Brent is likely to average US$110 in the second quarter. Moscow has repeatedly denied that it plans to invade Ukraine. 

Iran’s foreign minster said on Wednesday that it wants to settle the remaining issues in the coming days, but that it won’t concede on its red lines “under any conditions.” Any restoration of Iranian barrels to the global market would help ease tightness.

The U.S. is in discussions with oil exporters and importers to try to smooth fallout from any escalation in hostilities and sanctions, Daleep Singh, Biden’s deputy national security advisor, said at the White House. The talks include the possibility of tapping strategic oil reserves on top of the plan announced last year, he said.

Prices

• West Texas Intermediate for April delivery rose 19 cents to settle at US$92.10 a barrel in New York.
• Brent for April settlement was unchanged settling at US$96.84 a barrel.

At the same time, Brent crude’s premium to U.S. oil futures surged to nearly US$5 a barrel, the most since April, 2020. The international benchmark is getting stronger from the fear of possible disruptions of energy supplies as Russia-Ukraine tensions escalate, said Spencer Vosko, director for crude oil at Black Diamond Commodities LLC.

“Here in the U.S., WTI is somewhat shielded from it since North American production is seen as growing once again,” added Vosko. 

Meanwhile in the Persian Gulf, Iran is moving more oil onto ships to speed up exports should the Iran nuclear deal be revived. While it would need a few months to ramp up production, Iran could restore about 1 million barrels a day of supply to global markets, Vitol Group CEO Russell Hardy said in a Bloomberg Television interview this week. 

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