By Adedapo Adesanya
Oil prices soared higher by about 7 per cent on Friday with new reports that the United States was considering a ban on Russian crude oil.
This shot the Brent crude futures higher by 6.93 per cent or $7.65 to $118.11 per barrel and raised the US West Texas Intermediate (WTI) crude futures by 7.44 per cent or $8.01 to $115.68 per barrel.
That was the highest close for Brent since February 2013 and for WTI since September 2008. During the week, Brent rose to its highest intraday since May 2012 and WTI its highest since September 2008.
The administration of Mr Joe Biden is now said to be looking at what can be done immediately to make up for Russian crude oil, should they take that route, White House Council of Economic Advisors chair Mrs Cecilia Rouse said on Friday.
“We are considering a range of options, but what’s really essential is that we maintain a steady supply of global energy,” she said at a press briefing.
Previously, the White House had dismissed the idea of banning Russian crude oil imports, pointing out that doing so could cause oil and gasoline prices to rise even more than they already had.
Now, they have to contend with the possibility of picking both extremes as a ban on Russian crude oil and crude products could send oil—and petrol prices even higher while stoking inflationary reactions.
Crude futures have soared more than 20 per cent since the United States and allies sanctioned Russia following its February 24 invasion of Ukraine.
Russian oil sales have been disrupted, with sellers finding it very difficult to make deals even as they offer massive discounts to benchmark Brent crude.
This development offset whatever concerns that talks between Iran officials and the US government on reviving a nuclear deal could be signed soon.
However, any agreement will not immediately allow Iran to legally export oil as compliance with the agreement would take a few months to verify.
Most refiners around the world have also shunned Iranian oil for several years and they would need two to three months to finalize technical arrangements to enable imports from Iran to resume, analysts said.
Iran has tens of millions of barrels of oil in storage that can be released once its compliance with the nuclear agreement is verified, but some of that oil is heavy condensate and not very helpful to lower prices.
This is happening as the Organisation of the Petroleum Exporting Countries and its influential energy partners jointly known as OPEC+ made no move to calm the market as it stick to the return of 400,000 barrels per day for April.
OPEC+ has faced pressure from top consumers such as the US and India to pump more to reduce prices and aid the economic recovery but the group has resisted calls for speedier increases despite higher oil prices due.
Modupe Gbadeyanka