Both global oil price benchmarks settled well above $100 on Tuesday as sanctions related to Ukraine’s invasion are already starting to weigh on Russian crude exports.
The barrel of Brent from the North Sea pushed up to 107.57 dollars, for the first time since July 2014, while the American West Texas Intermediate (WTI) rose to 106.78 dollars, a first since June 2014.
Nothing could stop the mad ascent of the price of black gold, not even the announcement by the International Energy Agency of the marketing of 60 million barrels drawn from the reserves of its countries. members, in an attempt to stabilize the market.
The decision was touted by the agency as “a united and strong message to global oil markets that there will be no supply shortages resulting from the Russian invasion of Ukraine.”
According to the US Energy Information Agency (EIA), some 97 million barrels of crude oil and petroleum products were consumed daily in 2021 worldwide.
A barrel of Brent North Sea oil for May delivery ended up 7.14% at $104.97, while the same amount (about 159 liters) of WTI, for April delivery, closed at 103. .41 dollars, up 8.03%, after a jump of more than 11% in session.
“As long as the situation escalates in Ukraine, prices will continue to rise, because it increases the likelihood that Russian exports will be sanctioned and inaccessible to the market,” commented John Kilduff, of investment advisory firm Again Capital. .
On the sixth day of the Russian invasion of Ukraine, fighting continued and shelling targeted Kharkiv, the country’s second largest city. According to the Pentagon, the offensive on the capital Kiev is “at a standstill”, halted by Ukrainian resistance and logistical problems.
Russia is the second largest exporter of crude oil in the world and accounts for more than 40% of the European Union’s annual natural gas imports.
“The issue of direct sanctions on Russian oil and gas exports is a matter of timing, not probability,” said Markets.com analyst Neil Wilson.
“We will definitely” take new sanctions against Russia, German Chancellor Olaf Scholz warned on Tuesday.
– Isolate Moscow –
According to several operators, Russian oil exports are already under pressure.
“Some of the traders I deal with try to sell (Russian oil) at knockdown prices, but no one wants it,” said John Kilduff.
“The business world is building a fortress to isolate Russia from the international community,” said Susannah Streeter, analyst for Hargreaves Lansdown. Companies around the world are responding to Russia “by freezing transactions with Moscow and abandoning financial investments worth billions”, she continues.
The British hydrocarbon giant Shell announced on Monday that it would part with its shares in several joint projects with the Russian group Gazprom in Russia, due to the Russian invasion of Ukraine, following the example of its compatriot BP which is disengaging from the Russian giant. Rosneft.
The French TotalEnergies announced on Tuesday that “it will no longer provide capital for new projects in Russia”.
The French shipowner CMA CGM has announced the suspension of new orders from and to Russian ports, following in the footsteps of its main competitors Maersk and MSC.
Enough to cause “a disruption of shipments from Russia with cancellations of cargo reservations”, resulting in an increase in energy prices “in the short term, without Russia turning off the taps”, adds Ms. Streeter .
Western countries have also decided to exclude large Russian banks from the Swift interbank platform, an essential cog in global finance.
A considerable proportion of oil transport at sea is usually financed on credit, and according to an executive of a shipping company, on condition of anonymity, it is becoming increasingly difficult for principals to find an establishment lender.
According to JPMorgan analysts, even Chinese banks have started to pull out.
Moscow is preparing, for its part, a decree to try to stem the haemorrhage of foreign investment which has begun since the announcement of sanctions against Moscow, according to Prime Minister Mikhail Michoustine.
“Fears that Russia will retaliate by using its energy exports as a weapon are keeping oil and gas prices high,” said Streeter.