Oil Prices Dip After Initial Surge on Oilfield Outage

Crude oil prices over $2 per barrel on Monday on the news about a production halt at Norway’s Johan Sverdrup field due to an onshore power outage but earlier today the momentum began to slow down with traders refocusing on fundamentals. Despite that dip, the market will be carefully watching developments between Russia and Ukraine. was trading at $73.

36 a barrel at the time of writing, with at $69.20, both up from opening but modestly. “Some position adjustments kicked in after Monday's rally,” Fujitomi Securities analyst Toshitaka Tazawa Reuters.



“But investors stayed wary, assessing the direction of the Russia-Ukraine war after the weekend's escalation,” he added. Meanwhile, Norway’s Equinor, which operates Johan Sverdrup, said it was working to resume production at the field but did not specify when the restart was expected. is the biggest producing oil field in Western Europe.

It began producing in 2019 and its peak output is seen either this year or next. The peak production level is seen at 755,000 barrels daily, which is significantly higher than initial peak output expectations of 660,000 bpd. The peak output was hit for the first time this September when Johan Sverdrup produced 756,000 bpd.

The field’s output alone accounts for a third of Norway’s total oil production. Meanwhile, oil prices got a geopolitical boost at the start of the week that seems to have remained for the time being. The boost came from the Biden administration’s decision to allow the Ukrainian army to target Russian territory with long-range missiles.

The decision was a stark departure from the administration’s previous stance. Russia called the decision reckless and warned it would constitute a direct confrontation with NATO. “Despite the strength in the flat price yesterday, the prompt WTI time spread flipped into contango, which points towards a market that looks better supplied,” ING’s Warren Patterson and Ewa Manthe in a note earlier today.

“Globally, our balance shows that the market will be in surplus through 2025.” By Irina Slav for Oilprice.com.