LONDON: Oil prices steadied on Tuesday as the restart of production at Norway’s Johan Sverdrup oilfield offset investor concerns about an escalation in the Russia-Ukraine war.
Equinor resumed partial production from the North Sea oilfield, Western Europe’s largest, after a power outage there helped lift oil prices by over 3% on Monday.
Brent crude futures were down 12 cents, or 0.2%, at $73.18 a barrel by 1425 GMT, while U.S. West Texas Intermediate crude futures slipped by 19 cents, or 0.3%, to $68.97.
“I guess the partial restart of the Sverdrup field is the driver of the setback, as well as a slightly stronger U.S. dollar,” said Giovanni Staunovo, analyst at UBS.
The U.S. dollar edged up on Tuesday to within striking distance of its one-year high. A strong dollar makes commodities such as oil more expensive for other currency holders and tends to weigh on prices.
A continuing outage at Kazakhstan’s biggest oilfield, Tengiz, also provided support. Tengiz has reduced oil output by 28% to 30% for repairs which are expected to be completed by Saturday, the country’s energy ministry said.
A rise in geopolitical tensions also underpinned prices.
Ukraine used U.S. ATACMS missiles to strike Russian territory for the first time on Tuesday, Moscow said, in an attack described by Russian foreign minister Sergei Lavrov as a Western escalation.
Russian President Vladimir Putin on Tuesday lowered the threshold for a nuclear strike in response to a broader range of conventional attacks.
U.S. President Joe Biden’s administration allowed Ukraine to use the U.S.-made weapons to strike deep into Russia, two U.S. officials and a source familiar with the decision said on Sunday.
The Kremlin said on Monday that Russia would respond to what it called a reckless decision by the Biden administration, having previously warned that such a decision would raise the risk of a confrontation with the U.S.-led NATO alliance.
Investors are wary, said Toshitaka Tazawa, an analyst at Fujitomi Securities, as they are “assessing the direction of the Russia-Ukraine war after the weekend’s escalation”.
While oil’s outright price has found support this week, the market structure has weakened. U.S. crude flipped to contango for the first time since February on Monday in a sign that supply tightness was easing.
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