Brent passes $127/bbl as supply concerns take hold
Talk that the US will ban of Russian imports in response to the invasion of Ukraine adds support to prices
08 March 2022 - 14:29
byRowena Edwards
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A German-registered tanker that was carrying Russian oil products lies moored in port on March 8, 2022 in Bremen, Germany. File photo: GETTY IMAGES/DAVID HECKER
London — Oil prices rose on Tuesday, with Brent surging past $127 a barrel, as the possibility of formal US sanctions against Russian oil exports spurred concerns about supply.
Benchmark Brent crude futures for May climbed $3.56, or 2.9%, to $126.77 a barrel at 11.03am GMT. West Texas Intermediate for April delivery rose $3.12, or 2.6%, to $122.52 a barrel.
Prices were supported after sources told Reuters the US, the world’s biggest oil consumer, may ban Russian oil imports in response to the country's invasion of Ukraine on February 24. The US is willing to take this step without the involvement of European allies, they added.
British oil major Shell said on Tuesday it plans to withdraw from Russian oil and gas and stop all spot purchases of Russian crude oil as a first immediate step.
Oil prices could climb above $300 a barrel if the US and EU ban imports of oil from Russia, deputy prime minister Alexander Novak said on Monday. Fears that Russia would respond to sanctions already imposed by halting energy exports pushed prices higher.
Goldman Sachs hiked its Brent price forecast for 2022 to $135 a barrel from $98, and its 2023 outlook to $115 a barrel from $105, reasoning that the world economy could face the “largest energy supply shocks ever”, given Russia’s key role.
An apparent slowdown in talks with Iran over its nuclear programme, which would end sanctions against its oil sales, added further price support. The EU envoy in the talks said it was up to Iran and the US to make political decisions to reach a deal.
Still, Iranian oil could take months to flow after a nuclear deal. Even if Iran alleviates current supply tightness with crude from floating storage, “the drop in free spare capacity and strategic oil reserves would likely keep energy investors uneasy and prices at elevated levels,” Swiss bank UBS said on Tuesday.
Oil supply disruptions come as inventories continue to fall worldwide. Five analysts surveyed by Reuters estimate 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 US Energy Information Administration on Wednesday.
Support our award-winning journalism. The Premium package (digital only) is R30 for the first month and thereafter you pay R129 p/m now ad-free for all subscribers.
Brent passes $127/bbl as supply concerns take hold
Talk that the US will ban of Russian imports in response to the invasion of Ukraine adds support to prices
London — Oil prices rose on Tuesday, with Brent surging past $127 a barrel, as the possibility of formal US sanctions against Russian oil exports spurred concerns about supply.
Benchmark Brent crude futures for May climbed $3.56, or 2.9%, to $126.77 a barrel at 11.03am GMT. West Texas Intermediate for April delivery rose $3.12, or 2.6%, to $122.52 a barrel.
Prices were supported after sources told Reuters the US, the world’s biggest oil consumer, may ban Russian oil imports in response to the country's invasion of Ukraine on February 24. The US is willing to take this step without the involvement of European allies, they added.
British oil major Shell said on Tuesday it plans to withdraw from Russian oil and gas and stop all spot purchases of Russian crude oil as a first immediate step.
Oil prices could climb above $300 a barrel if the US and EU ban imports of oil from Russia, deputy prime minister Alexander Novak said on Monday. Fears that Russia would respond to sanctions already imposed by halting energy exports pushed prices higher.
Goldman Sachs hiked its Brent price forecast for 2022 to $135 a barrel from $98, and its 2023 outlook to $115 a barrel from $105, reasoning that the world economy could face the “largest energy supply shocks ever”, given Russia’s key role.
An apparent slowdown in talks with Iran over its nuclear programme, which would end sanctions against its oil sales, added further price support. The EU envoy in the talks said it was up to Iran and the US to make political decisions to reach a deal.
Still, Iranian oil could take months to flow after a nuclear deal. Even if Iran alleviates current supply tightness with crude from floating storage, “the drop in free spare capacity and strategic oil reserves would likely keep energy investors uneasy and prices at elevated levels,” Swiss bank UBS said on Tuesday.
Oil supply disruptions come as inventories continue to fall worldwide. Five analysts surveyed by Reuters estimate 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 US Energy Information Administration on Wednesday.
Reuters
MARKET WRAP: JSE weaker, oil prices hit multiyear high
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