CEM REPORT | Oil price briefly rose above US$130 per barrel Monday as US and Europe plan to sanction Russian oil following overwhelmingly condemned invasion of Ukraine
US Secretary of State, Antony Blinken confirmed this on Sunday during the NBC Meet the Press on Sunday talk show, when he said; “We are now in very active discussions with our European partners about banning the import of Russian oil to our countries, while of course at the same time maintaining a steady global supply of oil.”
At the time of writing, Brent was selling for US$125.1 with a galloping rise from US$118.65 it sold on Friday gaining 5.43%. WTI was selling for US$122.7 per barrel from the US$111.62 per barrel it sold last Friday. Bonny light, the Nigerian rude has risen to US$115.8 per barrel.
Putin has continued his hostility in Ukraine despite a series of sanctions which expectedly has weakened the Russian economy. As it stands currently, sanctions remain the only viable weapon against the Russian government to halt Moscow’s advance into Ukraine.
The European Commission President noted on CNN, “The goal is to isolate Russia and to make it impossible for Putin to finance his wars,” adding “For us, there is a strong strategy now to say we have to get rid of the dependency of fossil fuels from Russia.”
Removal of major Russian Banks from SWIFT was thought to be the nuclear sanction on Russia, but that didn’t break Putin’s assaults in Ukraine that have claimed thousands of lives and sending millions to flee . Sanctioning Russian oil industry if agreed upon, has long been considered the “nuclear option” as a ban on Russian oil could weigh on global supply in an already tight market.
It is certain that a ban on Russian oil will further weigh on global supply in an already tight market, as OPEC remain adamant to increase its quotas above the 400,000 barrels. This is capable of sending the market to about 5 million barrel shortfall and could push oil prices to $200 per barrel according to Bank of America analysts.