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The price of crude oil dropped Tuesday after a big jump a day earlier over jitters that Russia's military advance into Ukraine could result in economic sanctions against one of the world's major energy suppliers.
Benchmark U.S. crude for April delivery was down 47 cents to $104.45 a barrel at 0620 GMT in electronic trading on the New York Mercantile Exchange. The contract rose $2.33 to close at $104.on Monda. Brent crude, used to set prices for international varieties of crude, was down 73 cents at $110.47 a barrel.
Oil prices spiked Monday over the prospect of violent upheaval in the heart of Europe.
Russian troops controlled all Ukrainian border posts on the strategic peninsula of Crimea. Fears grew that the Kremlin might carry out more land grabs in pro-Russian eastern Ukraine, adding urgency to Western efforts to defuse the crisis.
Still, the West appeared to have limited options. The clearest weapon at the disposal of the EU and U.S. appeared to be economic sanctions that would freeze Russian assets and scrap multi-billion dollar deals with Russia.
Russia was the world's second-largest producer of oil in 2012, accounting for 12.6 percent of global supplies, according to the International Energy Agency. It was also the world's top exporter of natural gas in that year, the IEA said. So, any economic sanctions taken against Moscow would limit world supply and push up prices.
Evan Lucas, market strategist at IG in Melbourne, Australia said the market is watching Europe's modest response to Russia's actions. Unlike the U.S. and Canada, Europe has a trickier path to tread because one third of its oil and gas comes from Russia, mostly piped through Ukraine. A mild winter means European inventories are high so it could withstand a curtailment of Russian supply, he said.
In other energy futures trading on Nymex:
— Wholesale gasoline was nearly unchanged at $3.018 per gallon.
— Heating oil fell 0.3 cents to $3.077 per gallon.
— Natural gas was down 5 cents to $4.542 per 1,000 cubic feet.
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