Crude oil rallies as Russia-Ukraine tensions rise

Yahoo Finance's Jared Blikre details the rise in crude oil shares amid geopolitical conflicts between Russia and Ukraine.

Video transcript

ALEXIS CHRISTOFOROUS: Welcome back, everybody. Oil prices rallying today following the biggest one-day sell-off in a year. Traders appear to be focusing on the strong outlook for energy demand. Jared Blikre at the charts to fill us in. And of course, a lot of wildcards here, Jared, for this market. You've got the conflict between Russia and Ukraine heating up and you've also got the Iran nuclear talks.

JARED BLIKRE: That's right. And we can talk about Russia in a minute. And let's just focus on the price right now. And we can see nice rally underway, up almost 3%. You take a look at what happened yesterday, even at the lows it was not off that much. So simply on a two-day basis, still up 2.8%. And we'll take a longer-term view, we'll look at three months here, and you can see this is when we broke to the highest level since 2014. And we really have maintained those gains, so energy has persevered in the midst of the sell-off.

And I just want to show the sector action for today real quick, energy up 3.5%, financials up as well. So the value trade really working out here. Here's the energy heat map. Exxon up over 2.5%, Chevron up over 3%, BP up over 4%. Let's take a look at the 16-day gains for 2022. Really impressive to see ExxonMobil up 22% here. So you mentioned Iran, those sanctions have been in consideration for over a year as potential market movers. Since Biden has been in office, those talks expected to resume but nothing's really happened on that front. So yes, there would be additional supply coming into the market. Let's remember that they're a member of OPEC and OPEC Plus, so I think the Saudis would keep that under wraps.

KARINA MITCHELL: And then you guys just touched on it, I spoke with it earlier on with our guest just a few minutes ago, Ukraine-Russia tensions obviously a big issue. How does that impact energy?

JARED BLIKRE: Yeah, that's really the big issue here. Because typically, global conflagrations really don't lead to major market meltdowns, at least ones that don't last for a while. They tend to be pretty quick in nature. But given Russia's outsized influence in the energy market, it is a huge producer-- not quite up to Saudi Arabia levels, but it is a contender with the US. And when you have that kind of firepower, there's a lot they could do. They could easily spike crude oil up to $100 per barrel or even more. I don't think that's on the agenda, but if they're facing crippling sanctions you can't count that out. So I think it's going to be very important to study the negotiations and read how they are coming out.

But I don't think Russia is going to do anything drastic that forces Biden's hand that we do get those crippling sanctions, which does lead to higher energy prices.