Oil Jumps After Reports of Russian Missiles Landing in Poland

(Bloomberg) — Oil prices spiked following media reports of Russian missiles crossing into Poland that coincided with Hungary announcing sections of Europe’s biggest pipeline were halted.

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West Texas Intermediate futures reversed an earlier decline, climbing as much as 3.3% to trade near $89 a barrel. Oil popped as a quick succession of media reports signaled Russia’s offensive in Ukraine may be spilling across borders. The US is aware of the reports of missiles landing in the NATO member country and is looking into them, said a Pentagon spokesman at a press briefing.

Hungarian refiner MOL said part of the Druzhba pipeline, Europe’s largest, was halted after a power outage affected some sections of the conduit. Shortly after, Poland’s Prime Minister Mateusz Morawiecki convened an extraordinary meeting of the National Security Committee, government spokesman Piotr Muller said on Twitter. The Associated Press then reported two people were killed in Poland by Russian missile strikes.

“The market is going to have to recalibrate the potential risk to global oil supplies if this war escalates,” said Phil Flynn, a senior market analyst at Price Futures Group. “It’s going to be critical to see how NATO and the United States decide to respond to this provocation.”

While crude has lost about a third of its value since early June on economic slowdown concerns, markets remain volatile as geopolitical risk remains a constant threat to already tight global fuel balances. The Organization of Petroleum Exporting Countries and its allies have started trimming output and European Union sanctions on Russia will curb flows from December.

Crop futures also jumped on concern that an escalation in the war may endanger a deal that has allowed exports of grains from Ukraine through the Black Sea. Corn and wheat both gained almost 3% in Chicago before trimming some of the advance.

–With assistance from Julia Fanzeres.