Oil prices soared to seven-year highs on Wednesday, as traders attempted to find alternative sources of oil in a market that was already tight.
Concerns over supply disruption grew as a result of the massive sanctions imposed by Western countries on Russian banks because of the escalating Ukraine war initiated by Moscow prompting fears in the market of a glut in supply in the global oil industry.
Brent oil futures were up $5.30, or 5 per cent, to $110.23 a barrel at 0419 GMT, the highest level since July 2014.
WTI oil futures in the United States were up $5.02, or 4.8 percent, to $108.41, after touching a record not seen since September 2013.
"Trade disruptions are starting to get people's attention," said Westpac economist Justin Smirk. "Issues around trade finance and insurance - that's all impacting exports from the Black Sea. The supply shocks are unfolding," he said.
Russian oil exports make for around 8 per cent of total global supply of oil and gas.
As a result of Moscow's invasion of Ukraine, Exxon Mobil said on Tuesday that it will abandon Russia's oil and gas businesses. The corporation will no longer manage big industrial facilities on Sakhalin Island in Russia's Far East as a result of the decision. find out more Traders in New York and the Gulf of Mexico are avoiding Russian crude, despite the fact that Western governments have not put outright bans on energy shipments.
"People are not touching Russian barrels. You may see some on the water right now, but they were bought prior to the invasion. There won't be much after that," one New York Harbor trader told Reuters.
Bharat Petroleum Corp, a state-owned Indian refiner, is seeking more oil from Middle Eastern suppliers for April, anticipating that Western sanctions on Russia may disrupt supply of Urals crude.
Saudi Arabia, the world's top oil supplier, is expected to raise crude prices for Asia considerably in April, according to trade sources, with differentials for most grades reaching all-time highs as global supplies tighten due to sanctions on Russia's funding and shipping.
The International Energy Agency decided on Tuesday to release 60 million barrels of oil in a synchronised release, but analysts warned this would only bring short respite on the supply front.
"They helped to cap the rise, but if you want to turn prices around, you need something more sustainable," Smirk said.
According to the IEA, commercial oil stocks are at their lowest level since 2014.
In this context, the Organization of Petroleum Exporting Countries, Russia, and their allies, collectively known as OPEC+, will meet on Wednesday, when they are anticipated to keep to their plans to increase 400,000 barrels per day of supply each month. find out more
The latest statistics from the American Petroleum Institute industry organisation indicated that U.S. oil stockpiles declined by 6.1 million barrels for the week ending Feb. 25, underscoring market tightness.
The US Energy Information Administration is set to announce weekly statistics on Wednesday, with Reuters polling analysts forecasting a 2.7 million barrel increase in oil inventories.
(Source:www.businesslive.co.za)
Concerns over supply disruption grew as a result of the massive sanctions imposed by Western countries on Russian banks because of the escalating Ukraine war initiated by Moscow prompting fears in the market of a glut in supply in the global oil industry.
Brent oil futures were up $5.30, or 5 per cent, to $110.23 a barrel at 0419 GMT, the highest level since July 2014.
WTI oil futures in the United States were up $5.02, or 4.8 percent, to $108.41, after touching a record not seen since September 2013.
"Trade disruptions are starting to get people's attention," said Westpac economist Justin Smirk. "Issues around trade finance and insurance - that's all impacting exports from the Black Sea. The supply shocks are unfolding," he said.
Russian oil exports make for around 8 per cent of total global supply of oil and gas.
As a result of Moscow's invasion of Ukraine, Exxon Mobil said on Tuesday that it will abandon Russia's oil and gas businesses. The corporation will no longer manage big industrial facilities on Sakhalin Island in Russia's Far East as a result of the decision. find out more Traders in New York and the Gulf of Mexico are avoiding Russian crude, despite the fact that Western governments have not put outright bans on energy shipments.
"People are not touching Russian barrels. You may see some on the water right now, but they were bought prior to the invasion. There won't be much after that," one New York Harbor trader told Reuters.
Bharat Petroleum Corp, a state-owned Indian refiner, is seeking more oil from Middle Eastern suppliers for April, anticipating that Western sanctions on Russia may disrupt supply of Urals crude.
Saudi Arabia, the world's top oil supplier, is expected to raise crude prices for Asia considerably in April, according to trade sources, with differentials for most grades reaching all-time highs as global supplies tighten due to sanctions on Russia's funding and shipping.
The International Energy Agency decided on Tuesday to release 60 million barrels of oil in a synchronised release, but analysts warned this would only bring short respite on the supply front.
"They helped to cap the rise, but if you want to turn prices around, you need something more sustainable," Smirk said.
According to the IEA, commercial oil stocks are at their lowest level since 2014.
In this context, the Organization of Petroleum Exporting Countries, Russia, and their allies, collectively known as OPEC+, will meet on Wednesday, when they are anticipated to keep to their plans to increase 400,000 barrels per day of supply each month. find out more
The latest statistics from the American Petroleum Institute industry organisation indicated that U.S. oil stockpiles declined by 6.1 million barrels for the week ending Feb. 25, underscoring market tightness.
The US Energy Information Administration is set to announce weekly statistics on Wednesday, with Reuters polling analysts forecasting a 2.7 million barrel increase in oil inventories.
(Source:www.businesslive.co.za)