LONDON — Brent oil futures rose above $108.50 a barrel on Tuesday, supported by building tension in the Ukrainian crisis as the West threatened sanctions against Russia as early as this week.
But concern over demand growth in the world’s two biggest oil consumers, the US and China, kept prices under pressure.
Brent futures traded 53c higher at $108.61 a barrel by 10.13am GMT. US crude was up 35c at $101.47 a barrel.
In the worst East-West standoff since the Cold War, France said sanctions against Russia could be imposed as early as this week if Moscow failed to respond positively to an initiative to calm the crisis.
Ukraine said it would raise a new national guard force in response to Russian attempts to annex Crimea, a day after a pro-Russian force opened fire while seizing a Ukrainian military base there.
"Although events in the Ukraine were not the headline maker yesterday there were no signs of any sort of diplomatic breakthrough. If anything the confrontation worsened with Russia tightening its grip on the Crimea. If the referendum goes ahead next Sunday a sell-off later in the week has to be budgeted for," PVM analyst David Hufton said in a note.
The Crimean regional assembly last week called for a referendum on March 16 on joining Russia. Kiev has branded the move illegal.
Oil is also drawing support from the worsening crisis in Libya. The North African nation stopped a North Korean-flagged tanker that had loaded oil from a rebel-held port, after naval forces briefly exchanged fire with the rebels, officials said.
But in a sign of the chaos and conflicting information typical for Libya, rebel leader Ibrahim Jathran denied in a televised statement broadcast from a ship that he had lost control of the oil tanker.
Indicating a weak demand outlook, US crude inventories are expected to have risen last week as a bitter cold spell ends and as refiners take down plants for scheduled maintenance.
That forecast followed data from China showing a sharp drop in exports, pointing to weak economic activity.
Other risk assets such as Asian markets and base metals found their feet after a rocky ride the previous session, though uncertainty about the true state of China’s economy kept the mood brittle.
Traders were also eyeing the Organisation of Petroleum Exporting Countries’ monthly supply and demand report on Wednesday, which will be followed by that of the International Energy Agency on Friday.