by Florence Tan and Scott DiSavino
SINGAPORE, March 7 (Reuters) – Oil prices hit their highest level in nearly 14 years on Monday after the United States and its European allies mooted a ban on oil imports from Russia.
At 10:40 GMT, the barrel of Brent climbed 7.79 dollars (+ 6.6%) to 125.9 dollars and that of American light crude (West Texas Intermediate, WTI) gained 7.45 dollars, an increase of 6 .44%, to 123.13.
They both reached their highest level since July 2008 at 139.13 dollars and 130.50 dollars respectively.
Their all-time high dates from July 2018, at $147.50 for Brent and $147.27 for US crude.
US Secretary of State Antony Blinken said on Sunday that the United States and its European allies have discussed the possibility of banning imports of Russian oil.
Japan, which counts Russia as its fifth-largest crude supplier, is considering doing the same, reports the Kyodo news agency. And the United Kingdom said it was considering the question, stating that its imports of Russian hydrocarbons were very low.
“The rush to find additional barrels will undoubtedly kick into high gear this week to fill what could be a shortfall of 3 to 4 million barrels per day (mb/d) of Russian imports,” Helima said. Croft at RBC Capital.
“It could be complicated because OPEC’s immediate spare capacity is currently based on Saudi Arabia, the United Arab Emirates, Kuwait and Iraq, and we estimate that these four countries could only contribute between 2 and 2.5 mb/d over the next 30-60 days,” she added, noting that it remains to be seen how many countries will join an official embargo on Russian oil.
MOSCOW SOWING DOUBT ABOUT THE IRANIAN AGREEMENT
Bank of America estimates that if the bulk of Russian supply is embargoed, it could result in a shortfall of 5 million barrels or more and a $200 barrel.
Since the start of the year, oil prices have soared by more than 60%, as have those of other raw materials, raising concerns about a “stagflation” scenario, characterized by high inflation and low growth.
Moreover, new demands from Russia cast doubt on the imminence of a possible Iranian nuclear deal that could encourage an increase in global supply.
Iran’s Foreign Ministry, however, said on Monday that an agreement could be reached quickly if Washington accepted its final demands and criticized Russia’s last-minute “interference” in the talks.
An agreement to limit Iran’s nuclear program would lead to the lifting of sanctions on its oil sector, but it would take several months for more Iranian production to flow, and even then it may only offer short-term respite to markets, analysts said. (Report Florence Tan in Singapore and Scott DiSavino in New York; with Dmitry Zhdannikov in London, French version Laetitia Volga, edited by Blandine Hénault)