Adedapo Adesanya
By Adedapo Adesanya
Crude oil prices surged more than 6 per cent on Tuesday, hitting their highest level since June 2014 as Russia continued its advancement into Ukraine, sparking more reactions from traders and observers.
The international crude benchmark, Brent, jumped 6.72 per cent or $6.72 to $104.69 while the US West Texas Intermediate (WTI) crude rose by 7.61 per cent or $7.28 to $103.00 per barrel.
Prices first topped the $100 mark last week when Russia invaded Ukraine, prompting fears of supply disruptions from key exporter, Russia, in what is already a very tight market.
But on Tuesday, prices advanced on reports that the US and other major economies have agreed on a coordinated release of oil stockpiles after Russia’s invasion of Ukraine.
The International Energy Agency (IEA), which represents key industrialized consumers, including Japan and Germany, agreed to deploy 60 million barrels from stockpiles around the world.
A 60 million barrel release from strategic oil reserves would be equivalent to less than six days of Russian output, and traders are weighing the potential impact.
This release will mark the second from American crude reserves within a few months as soaring fuel costs become a growing political problem for US President Joe Biden.
On Monday, US neighbours, Canada, said it was banning Russian oil imports, but so far, it’s the only nation to target Russia’s energy complex directly.
Meanwhile, the European Union (EU) is discussing the exclusion of seven Russian banks from the SWIFT messaging system, including VTB Bank PJSC, in the latest list of financial penalties against Russia.
Prior to the invasion of Ukraine, the global oil market was already tight with demand bouncing back, while supply has remained constrained.
The Organisation of the Petroleum Exporting Countries and its allies, OPEC+ which includes Russia, will meet on Wednesday to discuss output for April.
The alliance is widely expected to continue raising its overall production quota by 400,000 barrels per day according to the plan from last year, despite the surging oil prices.
It is not sure where most of the oil producers stand but the United Arab Emirates (UAE) abstained last week from voting a resolution of the United Nations to condemn the Russian invasion of Ukraine. The other two countries which abstained were China and India, while Russia vetoed the resolution.
