Oil prices slipped in Asian trade today but analysts said they were supported by concerns of an escalation of the Ukraine crisis after the crash of a Malaysian airliner last week.
Investors were also keeping an eye on developments in West Asia after Israel launched a ground offensive against Hamas militants in Gaza, fuelling worries about the oil-rich region.
US benchmark West Texas Intermediate for August delivery was down 23 cents at $102.90 in late-morning trade, a day before the contract expires. Brent crude for September dipped 13 cents to $107.11.
Desmond Chua, an analyst with CMC Markets in Singapore, said investors are waiting for further news on whether the shooting down of Malaysia Airlines flight MH17 over Ukraine’s airspace on July 18 was carried out by separatist rebels supported by Russia.
He said proof of involvement by the pro-Moscow separatists in the incident will likely trigger stronger US and European sanctions against President Vladimir Putin’s government, threatening to widen the crisis.
Russia is the world’s second biggest crude producer, and there are concerns its standoff with the West over Ukraine could affect supplies. Ukraine is also a major conduit for Russian gas exports to Europe.
“If the Russians were found to have assisted the rebels by providing the weaponry, the situation may escalate,” Chua said.
Tensions in West Asia are also expected to put keep oil prices high.