By Cassie Werber
LONDON--Oil prices headed higher on Friday, supported by rising
tension in Ukraine.
Ukraine on Thursday accused Russia of invading its territory,
sending Russian troops to fight alongside rebels in eastern
Ukraine.
Yet the increase in prices has so far been slight, as investors
bet that it is in the interests of both Russia and Europe to keep
oil shipments flowing, despite the escalating conflict--even if the
U.S. and Europe impose a new round of sanctions on Russian
exports.
"It is extremely unlikely that Russia would suspend oil
shipments in the event that further sanctions were to be imposed,"
Commerzbank analysts said in a research note.
For several months, Western leaders have said a Russian invasion
of eastern Ukraine would prompt harsher economic strictures on
Russia. But President Obama has also made clear that the U.S. and
its allies won't intervene militarily to stop Russian forces.
Political and military tension in other parts of the world,
particularly the Middle East, has also had a limited effect on
prices because there is so much oil in the system.
Iraq, which produces 2.6 million barrels of oil a day, has
continued to pump oil even while it has been under siege from
Islamic State forces.
Bank of America Merrill Lynch analysts said that oil prices
could rise by as much as $40-$50 per barrel if production in
Southern Iraq is lost, but added that "the risk of this is very low
in our view."
Oil for October delivery is up 41 cents at $102.87 a barrel on
ICE Futures Europe. West Texas Intermediate for October is up 54
cents at $95.09 on the New York Mercantile Exchange.
ICE gas oil for September changed hands at $866.50 a metric ton,
up $1.50. Nymex gasoline was up 98 points at $2.6006 a gallon.
Gregory L. White in Moscow contributed to this article.
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