Ukraine crisis: Oil price see-saws near 14-year highs as US weighs Russia oil embargo

Russia exports around 7 million barrels per day of crude and oil products.

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Reuters file

By Reuters

Published: Tue 8 Mar 2022, 9:02 AM

Oil prices see-sawed near 14-year highs on Tuesday as the United States considered acting alone to ban Russian oil imports rather than teaming up with allies in Europe, easing concerns of a wider disruption to crude supplies.

Brent crude futures were up $2.07, or 1.68 per cent, at $125.3 a barrel at 8.55 am UAE time.

US West Texas Intermediate (WTI) crude futures were up 1.32 per cent at $121.0 a barrel after also trading in a roughly $4 range.

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The erratic moves came following a sharp run-up on Monday to near 14-year highs when the Biden Administration said it was talking to Britain, France and Germany about a ban on Russian oil.

"The price move up has been far too aggressive in too short a time. The charts are telling us the oil price needs to do some digesting before it can move substantially higher," said Michael McCarthy, chief strategy officer at Tiger Brokers Australia.

Keeping a lid on price gains, late on Monday officials said the United States was willing to move ahead with a ban alone, and Germany, the biggest buyer of Russian crude, rejected plans for an energy embargo. A senior U.S. official, speaking on condition of anonymity, told Reuters no final decision had been made but "it is likely (to be) just the US if it happens."

Russia exports around 7 million barrels per day of crude and oil products.

"Markets though have already priced in a significant disruption to Russian oil exports already," Commonwealth Bank commodities analyst Vivek Dhar said in a note, pointing to how sanctions on Russian banks have already hit trade finance.

If all of Russia's oil exports were blocked from global markets, analysts have said prices could rocket to $200 a barrel, while Russia's deputy prime minister said oil could soar to more than $300.

"There is no capacity in the world in the moment that can replace 7 million barrels of exports," Opec Secretary General Mohammad Barkindo told reporters at an industry conference in Houston.

Australia's two refiners, Viva Energy and Ampol Ltd, said they had stopped buying Russian crude following Moscow's attack of Ukraine.

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Oil supply disruptions come as inventories continue to fall worldwide. Five analysts polled by Reuters estimated on average that US crude stockpiles decreased by about 800,000 barrels in the week to March 4.

The poll was conducted ahead of weekly inventory reports from the American Petroleum Institute, an industry group, on Tuesday and the U.S. Energy Information Administration on Wednesday.

Reuters

Published: Tue 8 Mar 2022, 9:02 AM

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