By Adedapo Adesanya
Brent crude traded at $100.99 per barrel on Monday after rising by $3.06 or 3.12 per cent 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.
Also, the United States West Texas Intermediate (WTI) crude oil futures appreciated yesterday by $4.29 or 4.68 per cent to sell for $95.88 per barrel as Russian oil disruption fears intensify.
Analysts note that the already tight global oil market could become tighter following last week’s Russian invasion of Ukraine.
Now, Russia is facing severe disruption to its exports of all commodities from oil to grains after Western nations imposed stiff sanctions on the country.
Western governments also cut off some Russian banks from the SWIFT international payment system.
On Saturday, the US, European allies and Canada said they would disconnect specific Russian banks from the international financial system and harm their ability to operate globally.
The threat remains that Russia could retaliate to these sanctions by reducing or even completely suspending energy shipments to Europe, a move that will further drive prices higher since it accounts for 10 per cent of the global oil supply.
Russian President Vladimir Putin has also placed his nuclear deterrence forces on high alert.
The market will be waiting for the outcome of the meeting between the Organisation of the Petroleum Exporting Countries and its oil-producing allies, which include Russia. The group is set to meet this week to determine its production policy for April.
The oil alliance has been increasing output by 400,000 barrels per day each month as it unwinds the historic production cuts of nearly 10 million barrels per day implemented in April 2020 as the pandemic took hold.
There are expectations that OPEC+ may have to take a decision on Russia as all parties have been diplomatic so far.
But with Western governments already making their choices known, there are calls for the group to assess the ups and downs of continuing this partnership.
Already, OPEC+ needs to tackle a number of problems, which includes the lack of spare production capacity in general, as some OPEC producers are already unable to keep up with their own quotas.
The group will meet on Wednesday, March 2.
Dipo Olowookere