Oil surges to multi-year highs as Russian supply shortfall looms

Oil surged on Friday, ending the week at multi-year highs as Russia’s invasion of Ukraine intensified and oil buyers shunned barrels from the world’s second-largest exporter of crude.

Crude prices posted their largest weekly gains since the middle of 2020, with the Brent benchmark up 21% and U.S. crude gaining 26%. The most commonly traded oil futures closed at levels not seen since 2013 and 2008, respectively.

Oil surged throughout the week as the United States and allies heaped sanctions on Russia that, while not aimed at Russian oil and gas sales, nonetheless squeezed its industry, and threatens a growing supply crunch in coming months.

Brent futures rose US$7.65, or 6.9%, to settle at US$118.11 a barrel, while U.S. West Texas Intermediate (WTI) crude rose US$8.01, or 7.4%, to end at US$115.68.

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.

Russia exports 4 million to 5 million barrels of oil daily, making it the second-largest crude exporter in the world after Saudi Arabia. Traders were barely able to sell Russian oil all week, with Shell PLC (SHEL.L) on Friday the only notable buyer of a Russian cargo, which was sold at a steep US$28-discount to physical Brent crude.

The tumult is likely to continue. The Biden administration, under pressure from lawmakers from both major parties, said it is considering options for cutting U.S. imports of Russian oil even as it tries to minimize the impact on global supplies and on consumers.

Source: Oil surges to multi-year highs as Russian supply shortfall looms – Asaase Radio