WTI pushes on towards $110, eyes recent highs near $116 amid heightened geopolitical/OPEC supply concerns

• Oil prices are on the front foot on Monday amid heightened geopolitical tensions and OPEC supply concerns.
• WTI is heading towards $110 again, up over $16 versus last week’s lows, and eyeing recent highs around $116.

Oil prices put in a strong rally on Monday as concerns regarding an escalation of fighting in the Russo-Ukraine war and Libyan supply spurred bullish market moves. Front-month WTI futures were last trading higher by nearly $3.0 on the day in the $108.00s and eyeing a break back above $110 and push towards recent highs in the $116 area. WTI has rallied despite lower than usual market trading volumes given many major European market closures for Easter holidays.

The US benchmark for sweet light crude oil now trades an impressive more than $16 per barrel higher than last week’s lows in the $92.00s. The gains have been driven most recently by pessimism on the Russo-Ukraine front. Rhetoric from Ukrainian President Volodymyr Zelenskyy over the weekend suggests peace talks are on the brink of collapse based on what happens in Mariupol, while updates from Ukrainian officials suggest the new Russian offensive in the east has begun.

Member nations of the IMF and World Bank will be meeting this week and a major theme will be toughening sanctions on Russia given the insistence of Western/NATO countries who dominate these global institutions. Sanctions on Russia’s economy seem only likely to be toughened, including perhaps on energy and the impact on Russian output is already evident. Interfax reported last Friday that the country’s output has dropped 7.5% already in April since the end of March.

OPEC+ supply struggles were also in the limelight with Libya’s National Oil Corporation issuing a warning of a “painful wave of closures” and declaring a force majeure at its largest Al-Sharara oilfield, as well as at other sites. The state-owned corporation said that an unidentified group “put pressure on workers in Al-Sharara which forced them to gradually shut down production and made it impossible for NOC to implement its contractual obligations”.