The price of Brent oil is approaching $100 a barrel amid escalating tensions around Ukraine and growing concerns in Europe about disruptions in the supply of energy.
U.S. President Joe Biden ordered all U.S. citizens to leave Ukraine on February 11, stating that a Russian invasion could begin at any time, pushing oil price benchmarks close to $100 a barrel.
Dated Brent benchmark oil is estimated at $97.835 per barrel by S&P Global Platts today, while WTI MEH oil was estimated by analysts on Friday at $94.50 per barrel.
“Geopolitics defines optimistic moods. As Russian soldiers pile up on the border with Ukraine, so do market fears of an invasion and disruption of oil and gas supplies to Europe that could reach 250,000 barrels per day of oil and more than 4 billion cubic feet per day of natural gas.” writes S&P Global Platts Analytics in a research note.
In addition to the oil and gas markets, "optimism" is seen by analysts in the iron ore markets. Ukraine is the 13th largest steel producer in the world and the fifth largest exporter of iron ore.
In 2021, Ukraine produced 21.4 million tons of crude steel. About 80% of steel production is exported.
In 2021, the country exported 44.4 million tons of iron ore products and imported 9.85 million tons of metallurgical coal and coke products. 3.9 million tons of steel scrap were collected, of which 616,000 tons were exported.
The Kerch Strait, which connects the Black and Azov Seas and is used in both directions for the supply of steel, iron and other raw materials from Mariupol, will soon be closed temporarily, and in the event of an invasion, for an indefinite period.
Mariupol, Ukraine's main port on the Sea of Azov, is vital for exporting iron and steel from Ukraine and importing raw materials for steel production, especially coking coal. In recent years, steel supplies from Mariupol accounted for about a quarter of Ukraine's total exports in value terms.
Any restriction on the passage of ships through the Kerch Strait is likely to affect the supply routes used by the Ukrainian mining and steel group Metinvest and other bulk carriers on this route.
In addition, Ukraine accounts for about 13% of world exports of corn, it is the fourth largest exporter in the world and, in some ways, the largest in Europe. The country accounts for about a tenth of global wheat exports, which rose by 27% in the 2021-22 marketing year (July to the end of June) to 16.1 million tonnes.
Both corn and wheat are exported through a number of Ukrainian seaports, including the southwestern ports of Odessa, Yuzhny and Chornomorsk, capable of handling panamaxes, all of which are far from the front line.
At the moment, almost all countries of the world have withdrawn their missions from Kiev or moved their offices to the west of the country. Israel said it was evacuating relatives of embassy employees. In one of the latest, Australia said on Sunday it was evacuating its embassy in Kiev as the situation on the Russian-Ukrainian border deteriorated rapidly, and Prime Minister Scott Morrison urged China not to remain "frighteningly silent" about the crisis.
