Brent crude is trading at 10,904, up 0.4% on the day as talks get under way in Kiev to try and reach a settlement. However, it is unlikely that pro-Russian militants will attend, with the talks held in the east of the country where the trouble lies.
The regions of Donetsk and Luhansk have voted in favour of ‘self-rule’ and are seeking to become part of Russia. Unlike Crimea, Moscow appears to have less interest in the regions, probably because Crimea is more important to Russia from a strategic point of view.
As Alastair McCaig stated, traders are fearful that if a peaceful solution is not found we could see a tit-for-tat sanctions war between the west and Russia. Traders usually fear the worst and that is why we are seeing a jump in the oil price.
Brent has been stuck between the 10,800 and 10,900 ranges for the past two weeks, and if tensions heighten we could exceed the 11,000 level. If a political solution is found we could head towards the 50-day moving average of 10,780.