Ukraine Crisis Keeps Oil Prices High

Oil prices dropped a little on Tuesday but losses were limited by ongoing unease over the situation in Ukraine.

West Texas Intermediate for May delivery slipped 29 cents to $104.8 a barrel, while Brent Crude shed 51 cents to stand at $109.44 per barrel in afternoon deals.

Oil prices are likely to remain high unless the Ukraine crisis de-escalates. However there's little sign of either side working to implement the Geneva agreement reached on Thursday, as armed pro-Russian militias continue to occupy government buildings in Ukraine's east.

Tan Chee Tat, investment analyst at Phillip Futures, told AFP that lingering geopolitical tensions over Ukraine were keeping prices "at high levels".

"There are some agreements being made among the countries to try and resolve the conflict through diplomatic means but the markets are not too convinced," Tan said.

Meanwhile, US Vice President Joe Biden called on Russia to take action to de-escalate the crisis in Ukraine.

Speaking during a two-day visit to Ukraine, Biden told journalists Russia should "stop talking and start acting" and warned that further "provocative behaviour" would lead to "greater isolation".

Washington and Brussels have discussed imposing tougher sanctions on Russia, with the US considering sanctions on sectors of the Russian economy including mining, finance and energy.

So far, sanctions have been limited to asset freezes and travel bans against a number of individuals with close ties to the Kremlin.

Ukraine remains a vital supply link for the European Union to import Russian gas. The EU relies on Russia for around a third of its energy needs, 40% of which comes via Ukraine.

Russian energy giant Gazprom is currently engaged in a dispute with the Ukrainian government over the price Kiev pays for gas as well as a total of $2.2bn in outstanding gas bills. Gazprom almost doubled the price it chargers Ukraine for gas earlier this month. Kiev decried the move as "political pricing" and refused to pay the new price.

Investors are concerned that tougher sanctions or even the outbreak of a military conflict could disrupt supplies to the European market and send the energy markets into turmoil.