Brent Near Three Week High On Supply Worries

Brent crude oil made its way above $110 on Thursday as rising tension in Ukraine raised concerns about supply interruptions. The commodity traded at $110.08 at 6:50 GMT, near a three week high.

On Wednesday, the Ukrainian government put together a round table discussion in an effort to reign in the escalating crisis. However, the exclusion of pro-Russian separatist leaders added fuel to the nation’s growing divide. After last weekend’s secession vote, many are worried that Ukraine’s presidential elections on May 25^th will be disregarded.

Meanwhile, a dispute between Russia and Ukraine over gas prices and supplies is threatening to cause a disruption. Russia has said it will negotiate energy supplies with Kiev only if Ukraine pays its $4 billion gas debt. On Monday next week, energy ministers from Russia and the EU are set to meet in order to find a solution to the problem.

With half of Europe’s energy supplies coming from Russia via Ukraine, many are worried that the nation’s conflict could depress supplies at a time when demand traditionally increases. With the summer travelling season about to begin, most expect to see a rise in crude demand across the globe.

Prices saw some resistance after the Energy Information Administration reported that US crude inventories increased by 947,000 barrels to 398.5 million barrels last week. According the CNBC, analysts had expected to see a drop of 100,000 barrels.

However, supply worries in other parts of the world helped boost Brent prices as Libya continued to struggle with restarting its oilfields and talks between world powers and Iran remained uncertain.

On Wednesday, Iran and officials from six world powers met in Vienna to begin talks about Tehran’s nuclear program. Iran is looking to shed the sanctions that have kept its oil from the markets for the past two years, while the other world leaders are looking to curb Iran’s atomic capabilities.