Global oil prices surged higher again Wednesday, taking U.S. crude over $113 per barrel, as President Joe Biden looks set to unveil fresh sanctions on Russian exports following its month-long invasion of Ukraine.
Biden, who left Washington this morning for a meeting with NATO leaders in Brussels tomorrow, is reportedly set to detail new sanctions in Russia lawmakers, as well as a set of measures designed to lessen European reliance on energy exports from Moscow.
The U.S, Canada, Britain and Australia have issued outright bans on the purchase of Russian crude, but EU leaders have been unable to agree on sanction terms given the fact that Moscow exports account for nearly a third of their overall consumption.
Biden’s new moves, however, could extend recent gains for crude, which is already rising from news that Russian officials have ceased exports from its Caspian Pipeline Consortium, which accounts for about 1% of global output, as it repairs damages allegedly caused by recent winter storms.
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Last night’s data release from the American Petroleum Institute, as well, which showed a 4.3 million decline in domestic crude stocks for the week ending on March 18, provided further upward price pressures.
“On the demand front, the market is keeping a close eye on whether the recent surge in gasoline and not least diesel has started to negatively impact demand,” said Saxo Bank’s chief commodity strategist Ole Hansen. “Covid related lockdowns in China are already creating a great deal of uncertainty regarding demand from the world’s top importer.”
Brent crude futures contracts for May delivery, the global pricing benchmark, were last seen $4.89 higher on the session at $120.45 per barrel. WTI futures for the same month, which are more closely tied to U.S. gasoline prices, jumped $4.51 from Tuesday’s close to change hands at $113.78 per barrel.
Exxon Mobil (XOM) – Get Exxon Mobil Corporation Report shares were marked 2.6% higher in early Wednesday trading to change hands at $83.92 each. Chevron (CVX) – Get Chevron Corporation Report gained 1.6% to $166.45 each while Occidental Petroleum — the latest strategic investment of billionaire Warren Buffett — surged 4.5% to $62.23 each.
U.S. gasoline prices, which reached an all-time high of $4.331 per gallon on March 11, were also likely to move, with the AAA pegging the average national cost per gallon at $4.237 per gallon.
