Oil hits $110 a barrel as Russian stocks find few buyers

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The disruption to Russian exports has the potential to drive crude prices even higher

Oil extended its relentless rally above $110 a barrel before an Opec+ meeting as the severity of disruption to Russian supplies showed signs of growing.

Russia’s flagship Urals crude oil was offered for sale at a record discount but got no bidders, the latest indication that trading of oil from the country’s western ports is grinding to a halt. Consultant Energy Aspects said about 70% of Russian crude trade is currently frozen amid banking sanctions, spiking freight rates and wider political risks.

In a bid to cool prices, the International Energy Agency announced a strategic oil reserve release, but so far it has done little to tame a rampant market. The situation across the energy sector is very serious, IEA executive director Fatih Birol said Tuesday. Brent remains in deep backwardation, a bullish structure where prompt barrels are more expensive than later-dated cargoes, indicating nervousness over tightening supply. The benchmark’s prompt spread was $5.02 a barrel, a level not previously seen this century.

 

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