Oil Prices Rise Nearly 3% To $111 A Barrel, Driven By Supply Concerns

Crude oil prices rose nearly 3 per cent to $111 a barrel early on Monday as supply concerns continue to persist, with long positions in oil and commodities the most crowded trades. Still, volatility is expected to be the theme on ebbs and flows of the news on Ukraine-Russia peace talks.

The benchmark Brent crude oil contract for the front-end month was the last trading at $111 per barrel, up over 2.8 per cent after closing at $107.93 a barrel in the previous session.

That comes as Ukrainian resists heavy Russian attacks and after Ukraine's deputy prime minister said there was no question of surrendering the city of Mariupol. With the conflict escalating, and reports that some major oil producers would struggle to meet their agreed supply quota, the focus returns to the supply gap.

According to the International Energy Agency, 3 million barrels per day of Russian crude and products would be off the market by April.

"Crude oil prices recovered from their lows but showed weakness for a second consecutive week after oil prices climbed 7 per cent from low after the IEA said three million barrels a day (bpd) of Russian oil and products could be shut in from next month, said Rahul Kalantri, VP Commodities, Mehta Equities.

"The delay in the US-Iran deal and supply concerns from Russia could support crude oil prices at lower levels," he added.

With the latest report from the Organization of the Petroleum Exporting Countries and allies, including Russia (OPEC+), showing some producers are still falling short of their agreed supply quotas, it has added to investors' anxiety.

"The market continues to fret about supply disruptions, with data suggesting they are already impacting," ANZ analysts said in a note.