The threat of sanctions on Russian crude following its ‘full-scale’ invasion of Ukraine has U.S. oil prices topping $100 a barrel for the first time since 2014.
Updated at 8:48 am EST
U.S. oil prices soared past $100 per barrel for the first time since 2014 Thursday, while European natural gas prices surged more than 40% in the wake of Russia’s decision to launch a major invasion of neighboring Ukraine.
Sanctions on the sale of Russian crude, the world’s second-largest supplier behind Saudi Arabia, are expected from Western leaders later today following the invasion, which could also disrupt key natural gas pipelines that are crucial to the energy region’s energy mix.
“Today, in concert with our allies, we will agree a massive package of economic sanctions designed in time to hobble the Russian economy,” said U.K. Prime Minister Boris Johnson. “And to that end, we must also collectively cease the dependence on Russian oil and gas that for too long has given Putin his grip on western politics.”
Germany’s move yesterday to stall its final approval of the Nordstream 2 gas pipeline, a decision that was followed by U.S. sanctions on its operator, Gazprom, has also raised concerns for a retaliation by Moscow.
Natural gas prices, in fact, are soaring more than 40% in European markets, with summer 2022 contracts trading at 114.85 euros per megawatt hour (MWh) while in Britain, prices for summer power were also up 40% at 283.50 pence per British thermal units.
The Biden administration signaled Wednesday that it could tap the nation’s Strategic Petroleum Reserve if prices were to spike following a Russian attack, but stockpiles are at their lowest levels since 2002 following the President’s move to release 50 million barrels last November.
“Depending on the response from the U.S. and Europe, oil and gas prices are at risk of significant further rises, thereby reinforcing inflationary pressures and weighing on global growth, and eventually demand for crude oil,” said Ole Hansen, head of commodities strategy at Saxo Bank. “Focus today being the U.S. and European response, comments from Saudi Arabia and China, the world’s biggest producer and consumer of oil.”
Brent crude futures for April delivery, the global pricing benchmark, soared $8.17 to trade at $105.01 per barrel in early European dealing, while WTI futures for the same month, which are tightly linked to U.S. gasoline prices, surged $7.58 to $99.68 per barrel after briefly topping the $100 mark during the overnight European session.
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report was marked 2.9% higher amid the surge in crude prices, to indicate an opening bell price of $79.00 each, while its smaller rival Chevron (CVX) – Get Chevron Corporation Report gained 3.2% to $139.85 each.
