Business Maverick: Oil Pushes Higher After U.S. Escalates Russia Sanctions With Ban

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Oil continued its rally near $126 a barrel after President Joe Biden said the U.S. would ban the import of Russian crude, escalating efforts to hobble the nation’s economy that will further strain global energy markets.

and sparked concerns that the global economy is heading for a shock just as countries emerge from the Covid-19 pandemic. Banks and traders are predicting even higher crude prices and already tight energy markets are being stretched.

Russia is a key member of the OPEC+ alliance and a major producer of crude and petroleum products such as diesel. Mounting sanctions on the nation are prompting supply fears, with fuel prices following oil higher. American gasoline prices rallied to aOil imports from Russia made up about 3% of all the crude shipments that arrived in the U.S. last year.

“Europe is not following suit, quite simply because they can’t as yet,” said Jeffrey Halley, senior market analyst for Oanda Asia Pacific Pte. “That relieves some tension in oil markets. Brent crude will likely consolidate between $120 and $130 this week if the headline reel stays quiet.”West Texas Intermediate for April delivery rose 1.9% to $126.08 a barrel on the New York Mercantile Exchange at 10:20 a.m. in Singapore after advancing 3.6% on Tuesday.

Brent for May settlement climbed 2.2% to $130.80 on the ICE Futures Europe exchange after rising 3.9% on Tuesday. Brent remains in deep backwardation, a bullish structure where near-dated contracts are more-expensive than later ones, indicating tight supply. The global benchmark’s prompt spread was $4.79 a barrel in backwardation, compared with $3.02 at the start of last week.

 

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