NEW YORK--Oil futures rose Monday on concerns that the West could impose sanctions on Russia's energy sector in response to the deteriorating situation in Ukraine.
Light, sweet crude for June delivery settled up 60 cents, or 0.6%, at $100.59 a barrel on the New York Mercantile Exchange. Brent crude on the ICE futures exchange rose 52 cents, or 0.5%, to $108.41 a barrel, its highest settlement price since May 2.
The European Union modestly expanded its sanctions on Russia on Monday, a day after pro-Russian separatists in eastern Ukraine declared victory in a succession referendum. Western officials are now focused on how to expand sanctions if Russia undermines the May 25 Ukrainian presidential election.
Oil investors are concerned that further sanctions could curb supplies from Russia, the No. 2 crude exporter after Saudi Arabia. Thus far, EU and U.S. sanctions have yet to affect Russia's energy exports.
Investors were somewhat reassured Monday after Saudi Arabia's Minister of Petroleum and Mineral Resources Ali Al-Naimi said that even if sanctions were imposed on Russia's energy sector, the Organization of the Petroleum Exporting Countries could cover any shortfall.
A supply disruption is a "low-probability event, but it's not a zero-probability event," said Bill O'Grady, chief market strategist at Confluence Investment Management in St. Louis. "I think it's a very legitimate concern."
The crisis in Ukraine has offset rising U.S. production in the eyes of traders, keeping U.S. oil prices within a trading range of about $4. U.S. oil supplies fell in the week ended May 2 but remain near record highs, according to the U.S. Energy Information Administration. Data for the week ended May 9 is scheduled to be released Wednesday.
Reformulated gasoline blendstock, or RBOB, for June delivery settled up 1.86 cents, or 0.6%, at $2.9146 a gallon. June diesel rose 1.17 cents, or 0.4%, at $2.9185 a gallon.