Russia and Ukraine Conflict Pushes Oil to Two-Week High

Oil rose above $70 a barrel to settle at the highest in almost two weeks on signs that the Russia-Ukraine conflict is escalating further.

West Texas Intermediate climbed 2% after Ukraine said Russia launched a “new” kind of ballistic missile at the central city of Dnipro, following the expanded use of Western-provided, long-range weapons by Kyiv’s forces. Crude pared gains following reports that the weapon used wasn’t an intercontinental ballistic missile, which hasn’t been employed since its development at the inception of the Cold War, as initially thought. Brent rose 2% to its highest settlement since Nov. 7.

Prices also have gotten a lift from signs of improving demand, with premiums of refined products over crude climbing to multi-month highs. In the US, a proxy of the margins obtained from turning crude into gasoline and diesel recently hit the highest level since August as Gulf Coast fuel makers step up production to meet rising exports.

“The market looks less overextended to the short side, and could trade more sideways, if bumpily, in the coming weeks ahead of the OPEC+ meeting,” Citigroup Inc. analysts including Eric Lee said in a note. “Geopolitical risks are floating between potential bullish supply disruption risk in the Mideast and Russia-Ukraine, and the more bearish potential from” an impending Trump administration that may usher in trade tariffs and deregulation.

Oil has swung between gains and losses since mid-October, buffeted by a range of factors including concerns over Chinese demand and a stronger dollar that makes commodities priced in the greenback less appealing. The market is facing a supply glut next year, and investors are watching for a decision from OPEC+ on plans to start reviving idled supply. That has kept a lid on any rally fueled by geopolitical concerns.

Oil Prices:

• WTI for January delivery rose 2% to settle at $70.10 a barrel.
• Brent for January settlement advanced 2% to settle at $74.23 a barrel.