Oil prices hit $120 a barrel, depicting supply shortages
Oil prices hit a multi-year high.
Brent crude oil prices have taken a hike to $120 a barrel as Russian exports are disrupted by the wave of sanctions implemented on Russia, with fears arising of Washington slapping sanctions on Russian oil.
The Russian operation in Ukraine triggered soaring oil prices: yesterday, the oil prices surged above $110 a barrel after Russia faced economic damage and isolation.
On Wednesday, it was noted that the price for May 2022 futures contracts for Brent crude oil increased 5.83% on the ICE Exchange, increasing to $111.09 a barrel. The last time Brent crude prices exceeded $111 per barrel was in July 2014.
In the past 30 days, Brent crude prices have seen a 37% increase, as the six-month contract's spread hit an all-time-high record which indicates a shortage of supplies.
US West Texas Intermediate crude, in parallel, hit a high of $116.57, which is the highest value since 2008, the year which saw a global economic crisis. The price, then, decreased to $113.12, down 2.3% of the price.
This price hike comes as another round of US sanctions targets the Russian oil refining sector, which raises concerns about whether Russian oil and gas exports will be part of the coming sanctions.
Half of all 7 million barrels-a-day of Russian crude oil goes to Europe, as Moscow competes with Saudi Arabia to become the main crude and refined oil exporter in the world.
Washington has been implementing sanctions on Russia to target and suppress its economy - however, with knowledge of how sanctions on Russian oil will severely disrupt global supply and prices, Washington does not see the wisdom in sanctioning Russian oil exports.
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Although the US has not sanctioned Russian oil yet, 10 tankers of Russian oil have been left abandoned by the market, according to market sources.
"We expect that Russian oil exports will plunge by 1 million bpd from the indirect impact of sanctions and voluntary actions by companies," said Rystad Energy CEO Jarand Rystad.
"Oil prices are likely to continue to climb – potentially beyond $130 per barrel."