Oil prices rose on Wednesday as fears of a supply disruption mounted after heavy sanctions on Russian banks amid the deepening Ukraine conflict, while traders scramble to seek alternative sources of oil in an already strained market.
Brent crude futures rose more than $8 to hit a high of $113.02 a barrel, the highest since June 2014, before falling to $111.17, up $6.20 or 5. 9% equals to 0950 GMT.
US West Texas Intermediate (WTI) crude oil futures were also up more than $8 a barrel, hitting their highest since August 2013 before losing some steam and up $5.86, or 5.7%, to 109.27 traded $ per barrel.
“Due to limited diversification opportunities, any disruption in Russia’s energy exports will lead to another energy crisis in Europe,” said Kaho Yu, senior Asia analyst at risk consultancy Verisk Maplecroft.
“Although the US has called for a global release of oil reserves, oil prices are likely to remain above $100 unless significant alternative supplies come on the market.”
Russian oil exports account for around 8% of global supply.
Exxon Mobil announced Tuesday it would shut down Russia’s oil and gas business in the wake of Moscow’s invasion of Ukraine. The decision will result in the company stepping back from managing large manufacturing facilities on the island of Sakhalin in Russia’s Far East.
While Western powers have not imposed direct sanctions on energy exports, US traders at hubs in New York and the US Gulf are shunning Russian crude.
US President Joe Biden warned Vladimir Putin in a State of the Union address dominated by Russia’s invasion of Ukraine that the Russian leader “has no idea what’s coming”.
A coordinated release of 60 million barrels of oil by International Energy Agency member countries, agreed on Tuesday, failed to calm the market and prices rose after the announcement.
Meanwhile, the Organization of the Petroleum Exporting Countries, Russia and allies, collectively known as OPEC+, are due to meet on Wednesday, where they are expected to stick to plans to add 4,00,000 barrels a day to supplies each month.
Buyers are avoiding oil from the CPC pipeline originating in Kazakhstan, which accounts for more than 1% of global supply, due to sanctions concerns, likely exacerbating global supply shortages.