Oil prices surged by over 10% on Monday due to fears of a U.S. and European ban on Russian oil and delays in Iranian nuclear talks. Brent crude rose to $129.5, a 9.56% increase, while U.S. crude climbed to $125.17, marking an 8.23% rise.
At the opening of Asian markets today, oil prices saw a significant spike, with Brent crude jumping 18% to nearly $140 per barrel, while U.S. crude surpassed $130 per barrel before retreating from these highs. After a 21% increase in Brent crude last week, the rise continued amid concerns over potential U.S. and European sanctions on Russian oil.
Ethan Harris, chief economist at Bank of America, stated, "If the West halts the majority of Russian energy exports, it will be a significant shock to global markets." Harris estimated that a loss of five million barrels of Russian oil could double prices to $200 per barrel and significantly impact global economic growth.
This comes after U.S. Secretary of State Antony Blinken indicated that the Biden administration and its allies are discussing imposing a ban on Russian oil, with growing pressure to respond more robustly to the invasion of Ukraine by targeting exports from Russia’s main energy industry.
Additionally, concerns have increased among traders, shipping companies, insurers, and banks about accepting or financing purchases of Russian oil, while an official ban would further exacerbate the uncertainty that has led Brent to trade at its highest levels since the futures contract was introduced in 1998. The potential ban adds to the previous impacts of declining Libyan oil production due to political crises, as well as Saudi Arabia raising oil prices directed at Asia.
