Oil settles flat as escalation of Ukraine war counters Sverdrup field restart

NEW YORK – Oil prices were broadly unchanged on Tuesday as signs of escalation of the Russia-Ukraine war kept investors cautious of supply disruptions, but the partial restart of production in Norway’s Johan Sverdrup oilfield limited gains.

Brent crude futures rose by a cent to settle at USD 73.31 per barrel. US West Texas Intermediate crude futures rose 0.3%, or 23 cents, to close at USD 69.39 a barrel.

For the first time, Ukraine used US ATACMS missiles to strike Russian territory on Tuesday, Moscow said. Russian foreign minister Sergei Lavrov described the attack as a Western escalation. Russian President Vladimir Putin lowered the threshold for a possible nuclear strike.

“This marks a renewed build-up in tensions in the Russia-Ukraine war and brings back into focus the risk of supply disruptions in the oil market,” ANZ Bank analyst Daniel Hynes said.

Market watchers also pointed to signs of higher crude oil purchases by top importer China. China’s crude imports are on track to end November at or close to all-time highs, StoneX energy analyst Alex Hodes said, referencing data from vessel tracker Kpler.

Weak imports by China so far this year have weighed heavily on oil prices, pulling Brent futures down 20% from their April peak of over USD 92 a barrel. China’s crude oil imports in October fell from a year earlier for the sixth straight month.

China likely stepped up oil purchases this month as current prices offer relatively good value, Hodes said.

Limiting oil’s ascent, Equinor resumed partial production from the Johan Sverdrup field in the North Sea, Western Europe’s largest oilfield, the day after a power outage there contributed to a 3% surge in oil price benchmarks.

The restart and a stronger US dollar weighed on market sentiment on Tuesday, UBS analyst Giovanni Staunovo said.

Oil prices also came under pressure after confidential reports by the U.N. nuclear watchdog, seen by Reuters, said Iran has offered to stop expanding its stock of uranium enriched to 60% purity, near the roughly 90% of weapons-grade.

US crude oil stockpiles rose by 4.75 million barrels in the week ended Nov. 15, market sources said on Tuesday citing figures from the American Petroleum Institute.

Analysts polled by Reuters on average expect to see a smaller build of around 100,000 barrels. The US Energy Information Administration is scheduled to report official stockpiles data on Wednesday at 10:30 a.m. EST.

(Reporting by Shariq Khan and Alex Lawler, additional reporting by Ahmad Ghaddar, Yuka Obayashi and Emily Chow; editing by Jason Neely, Louise Heavens, Susan Fenton and David Gregorio)