Oil prices moved higher again on Friday as risk premiums...

  1. Oil prices moved higher again on Friday as risk premiums returned following the plane crash in Ukraine.

    Overnight oil rose back above US$108 as traders weighed the implication for international relations with Russia if separatists did shoot down the Malaysian Airlines plane, killing all 298 people on board.

    Meanwhile, tensions in the middle east were heightened as the Israeli PM indicated last night’s ground offensive may be only the start of its operations in Gaza.

    In London trading, Brent crude futures were changing hands at US$108, whilst West Texas Intermediary futures stood at US$103.15.

    Sanctions already on Russia and Russian companies create uncertainty over BP’s future growth, due to its 19.75% stake in Rosneft which is currently worth around US$15bn.

    Deutsche Bank analyst Lucas Hermann said: “In truth we are uncertain as to quite how this latest round of US sanctions will impact, although the clear read through to our mind for Novatek and Rosneft is that this latest initiative will make it even harder for them to raise long term US$ finance.

    “Project and trade funding is consequently likely to become a greater issue with funding costs potentially set to rise.

    “Superficially for those European companies with exposure, most notably BP with its 19.75% interest in Rosneft and Total (15.4% or c$8bn interest in Novatek) this is likely to add uncertainty over forward growth in investor minds.”

     

 
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