Oil prices rise after more sanctions imposed on Russia

London — 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 $4.16, or 4.3%, to $102.09, at 9.15 after hitting 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 $4.16 at $98.28.

US West Texas Intermediate (WTI) crude was up $4.19, or 4.6%, at $95.78 a barrel after hitting $99.10 in early trade.

“Moves by the US and Europe to remove certain Russian banks from the Swift system have raised fears of a disruption to supply of some sort in the near term,” said ANZ commodity strategist Daniel Hynes.

“The risk to supply is the greatest we’ve seen for some time and it comes in a tight market,” he 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.

Russian crude oil grades were already hammered in physical markets. Russia accounts for about 10% of global oil supply.

Goldman Sachs bank raised its one-month Brent price forecast to $115 a barrel from $95 per barrel 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.

Russian invasion forces seized two small cities in southeastern Ukraine but ran into stiff resistance elsewhere.

A Ukrainian delegation has arrived at the border with Belarus for talks on Monday with Russian representatives that will focus on achieving an immediate ceasefire and the withdrawal of Russian forces, the Ukrainian presidency said.

“If there’s any progress made in this meeting, we’re going to see a sharp reversal in markets — we'll see stocks rise, the dollar rise and oil fall,” said Oanda analyst Jeffrey Halley.

Amid the war in Ukraine, the Organization of the Petroleum Exporting Countries (Opec), Russia and allies — together called Opec+ — are due to meet on March 2. The group is expected to stick to plans to add 400,000 barrels per day (bpd) of supply in April.

Ahead of the meeting, Opec+ revised down its forecast for the oil market surplus for 2022 by about 200,000 bpd to 1.1-million bpd, underscoring market tightness.

At the same time a separate report showed Opec+ in January produced 972,000 bpd less than their agreed targets.

“The market being so tight with Opec producers really struggling to raise output as well, means any issue with Russian supplies would be felt pretty significantly across the market,” ANZ’s Hynes said.

Reuters