An non-operative oil pump is seen on the outskirts of El Tigre, Venezuela, June 2, 2019. REUTERS/Ivan Alvarado/Files
Oil prices rose on Tuesday, with Brent surging past $127 a barrel, as the possibility of formal U.S. sanctions against Russian oil exports spurred concerns over supply.
Benchmark Brent crude futures for May climbed $3.56, or 2.9%, to $126.77 a barrel at 11:03 GMT.
U.S. West Texas Intermediate (WTI) crude futures for April delivery rose $3.12, or 2.6%, to $122.52 a barrel.
Prices were supported after sources told Reuters the United States, the world’s biggest oil consumer, may ban Russian oil imports in the wake of Russia’s invasion of Ukraine on Feb. 24. The U.S. is willing to take this step without the involvement of European allies, the sources said. read more
Oil prices could climb to over $300 dollars per barrel if the U.S. and European Union 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 per 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. read more
An apparent slowdown in talks with Iran over its nuclear programme, which would end sanctions against its oil sales, added further price support. The European Union envoy in the talks said it was up to Iran and the U.S. to make political decisions to reach a deal.
Furthermore, Iranian oil could take months to flow after a nuclear deal. read more
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 polled by Reuters estimated on average that U.S. 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 U.S. Energy Information Administration on Wednesday.
Additional reporting by Sonali Paul and Mohi Narayan in New Delhi; Editing by Bernadette Baum
This article was originally published by Reuters.