Oil soars as Russian energy supply fears intensify
Weaker US dollar also helped support oil as it makes oil cheaper for those holding other currencies. PHOTO: REUTERS
Oil prices jumped on Monday as western allies imposed more sanctions on Russia and blocked some Russian banks from a global payments system, which could cause severe disruption to its oil exports.
Brent crude rose $2.32, or 2.4%, to $100.25 by 1436 GMT after touching a high of $105.07 a barrel in early trade.
The Brent contract for April delivery expires on Monday. The most active contract, for May delivery, was up $3.14 at $97.26.
US West Texas Intermediate (WTI) crude was up $3.09, or 3.4%, at $94.68 after hitting $99.10 in early trade.
“Growing concerns about disruptions to Russian energy supplies are pushing oil and gas prices up sharply,” Commerzbank analyst Carsten Fritsch said.
Russia is facing severe disruption to its exports of all commodities from oil to grains after western nations imposed stiff sanctions on Moscow and cut off some Russian banks from the SWIFT international payment system.
“Russia could retaliate to these harsh measures by reducing or even completely suspending energy shipments to Europe,” Fritsch said.
Russian crude oil grades, which account for about 10% of global oil supply, were hammered in physical markets.
Goldman Sachs raised its one-month Brent price forecast to $115 a barrel from $95 previously.
“We expect the price of consumed commodities that Russia is a key producer of to rally from here - this includes oil,” the bank said.
President Vladimir Putin put Russia’s nuclear deterrent on high alert on Sunday.
Russian forces seized two small cities in southeastern Ukraine, the Interfax news agency said, but ran into stiff resistance elsewhere.
Published in The Express Tribune, March 1st, 2022.
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