Oil prices rose on Wednesday as a U.S. ban on Russian oil imports and Britain’s plan to phase them out by the end of the year raised concerns of a tightening global offer.
Brent crude oil futures were up $2.17, or 1.7%, at $130.15 a barrel at 0133 GMT, after jumping 3.9% the previous day.
U.S. West Texas Intermediate (WTI) crude futures rose $1.57, or 1.3%, to $125.27 a barrel, after also jumping 3.6% on Tuesday.
US President Joe Biden imposed an immediate ban on Russian oil and other energy imports on Tuesday and Britain said it would phase out Russian oil imports until the end of 2022.
Oil prices have jumped more than 30% since Russia, the world’s second largest exporter of crude, invaded Ukraine. Fears of further oil supply disruptions amid escalating sanctions against Moscow boosted buying, analysts said.
“In addition to the announcement effects from the United States and Great Britain, fears of further supply disruptions from Russia due to the intensification of sanctions against Moscow have prompted new purchases,” said Hiroyuki Kikukawa, managing director of research at Nissan Securities.
“But Monday’s highs will likely become a near-term ceiling as speculative buying is expected to ease soon and Northern Hemisphere countries head into spring as fuel demand drops,” he said.
Oil prices jumped Monday to their highest levels since July 2008, with Brent hitting $139.13 a barrel and WTI $130.50.
Behind the rally were also expectations that an imminent return of Iranian crude to world markets was unlikely as talks over Iran’s nuclear program slowed between Tehran and world powers.
Analysts at Oslo-based consultancy Rystad Energy said on Tuesday that global oil prices could hit $200 a barrel if Europe and the United States ban imports of Russian oil.
Yet oil prices, which have reached their highest level in 14 years, are poised to reduce demand for fuel after the COVID pandemic, as consumers react to soaring pump and fuel prices. electricity by cutting spending and travel, top energy executives warned Monday.
U.S. crude inventories rose 2.8 million barrels for the week ended March 4 as analysts expected a decline, but gasoline and distillate inventories fell, market sources cite the figures from the American Petroleum Institute on Tuesday.
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