Oil prices surge to above $100 amid Russia-Ukraine war

Business Friday 18/March/2022 11:30 AM
Oil prices surge to above $100 amid Russia-Ukraine war

Washington: Amid intensified Russia-Ukraine war that entered the twenty-second day on Thursday, oil prices spiked back above $100 affecting energy supplies.

The concerns are growing over the potential length of war affecting energy supplies as the war in Ukraine is disrupting Russia's energy supplies, reported CNN. After sinking below USD 94 a barrel earlier this week, US crude soared 8 per cent to USD 102.65 a barrel in recent trading. Brent crude spiked 9 per cent to USD 107 a barrel.

The swift rebound in oil prices will be watched closely by leaders in Washington and Wall Street because high energy prices threaten to exacerbate inflation and slow down the economy, reported CNN.

Energy traders blamed Thursday's spike on growing pessimism about a resolution between Russia and Ukraine being reached in the near term.

"The mood has darkened a little bit," said Robert Yawger, vice president of energy futures at Mizuho Securities. "It sounds like this is going to be a dragged-out situation."

The recent drop in oil prices was driven in part by hopes for a potential ceasefire. The longer the war goes on, the bigger the threat to Russia's oil flows, reported CNN.

"Given Putin's actions in recent times, we shouldn't get our hopes up," said Matt Smith, lead oil analyst of the Americas at Kpler.

The International Energy Agency warned Wednesday that a staggering 30 per cent of Russia's oil production could be knocked offline within weeks, exposing the world economy to a potential supply crisis.

"The implications of a potential loss of Russian oil exports to global markets cannot be understated," the IEA said in its monthly report.

Despite Thursday's rebound, oil prices remain well below their recent peaks. US crude spiked to a nearly 14-year high of USD 130.50 a barrel on March 6, while Brent hit nearly USD 140 a barrel, reported CNN.

Gasoline prices are only inching lower, drawing criticism of the energy industry from the White House. The national average for regular gas dipped to USD 4.29 a gallon on Thursday, according to AAA. That's down by two pennies from Wednesday and four pennies from the record high of USD 4.33.