Oil prices rose in Asian trade today after Russia ordered new military exercises on the border with Ukraine in response to Kiev launching a deadly assault against pro-Kremlin rebels occupying a flashpoint town.
US benchmark, West Texas Intermediate crude for June delivery, was up two cents at $101.96 a barrel in mid-morning trade and Brent North Sea crude for June delivery also climbed two cents to $110.35.
In response to the Russian build-up, US Secretary of State John Kerry accused it of a “full-throated effort to actively sabotage the democratic process through gross external intimidation” and described the military exercises as “threatening’’.
He also said that Moscow had broken an agreement signed last week in Geneva aimed at easing tensions, adding that refusal to take any steps to end the crisis would “not just be a grave mistake, it will be an expensive mistake’’.
The veteran diplomat added “we are ready to act” as Washington tees up new economic sanctions against Moscow.
Tan Chee Tat, investment analyst at Phillip Futures in Singapore, said: “If the Ukrainian Government deploys more forces, I think it might trigger Russia to step in.”
Ukraine, a major conduit for Russian natural gas exports to Western Europe, is monitored closely by investors who are concerned that a full-scale armed conflict will disrupt supplies and send the prices rocketing.
The Soufan Group, a US-based consultancy that provides strategic security intelligence services to governments and multinational firms, said Russia accounts for 34 per cent of natural gas supplies to the European Union.
Washington and its European allies supporting Ukraine’s Western-friendly government have accused Russia of fomenting unrest in the country’s east, but Moscow has denied the allegations.