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Oil Rally Explodes As US Mulls Russia Crude Ban, Saudis Hike Selling Price 

Commodities Mar 04, 2022 03:22PM ET
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© Reuters.

By Barani Krishnan

Investing.com -- Crude prices posted double-digit weekly gains and closed at their highest in at least nine years after the White House said it was considering a ban on Russian oil imports, adding to the worries of a market already hyped up about sanctions on one of the world’s largest energy exporters. 

The escalating war in Ukraine and the West’s retaliation with more financial punishments on Moscow further fueled Friday’s crude. Another catalyst was Saudi Arabia’s announcement of a record hike in the selling price for its crude.

U.S. crude’s West Texas Intermediate, or WTI, benchmark settled up $8.01, or 7.4%, at $115.68 a barrel, its highest close since 2008.

For the week, U.S. crude was up about 26%, its biggest weekly gain since March 2020.

Global oil benchmark Brent was up $7.65, or 6.9%, at $118.11 a barrel. For the week, Brent rose 21% for its biggest weekly gain since April 2020.

WTI has risen some 54% since the year began and Brent about 52%. Crude’s rally saw a dramatic surge this week on worries that a litany of sanctions against Russia for its invasion of Ukraine would severely impact energy exports from Moscow, which provides some 10% of the world’s oil needs and 40% of Europe’s gas requirements.   

The White House said on Friday it was considering banning Russian oil imports to add to the global community’s isolation of Moscow over the war in Ukraine. No decision has been made on the matter, it, however, said. 

Biden administration officials have said over the past week that they did not wish to act rashly and ban oil Russian exports, which could dramatically raise energy prices for Americans already paying the most for fuel since the 2008 financial crisis. 

Saudi Arabia’s state-owned oil company Aramco (SE:2222), meanwhile, announced the highest hike ever in the official selling price, or OSP, to Asia, raising the premium for a barrel of Arab light crude meant for April delivery by $4.95 versus the Oman/Dubai average which it uses as its base.

Aramco said its April Arab light crude oil OSP to the US would go up by $3.45.

The lowest increase was for North West Europe, where the premium for April Arab light crude rose by $1.60 versus Brent, which hovered at $114 a barrel.

“This is what you call naked exploitation,” John Kilduff, partner at New York energy hedge Again Capital, said, referring to Aramco’s record price hike. “We know it’s business. But at a time when the world is in a dire emergency over the Russia-Ukraine crisis and the need for affordable and higher oil supplies is more than ever, we know we can count on the Saudis to throttle our necks more than ever.”

Crude prices briefly retreated on Thursday after headlines suggested brisk progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from U.S. sanctions on its oil.

Iranian media quoted Mikhail Ulyanov, Russia’s chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran’s oil to the market.

Oil Rally Explodes As US Mulls Russia Crude Ban, Saudis Hike Selling Price 
 

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Comments (12)
Tushar Nikte
Tushar Nikte Mar 05, 2022 12:42AM ET
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any view on this ???? crude will fall or go uppp
Henry Valle
Henry Valle Mar 05, 2022 12:42AM ET
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I think will go up, with the now interest rate rise from the fed , everything is going to be more expensive so US treasury can lower inflation and fix their economy thanks to apes money
Lauren King
Lauren King Mar 05, 2022 12:42AM ET
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Will hit 120 and from that point on it is a short big time I have been training crude for 15 years and I know but it takes
Andrew Ulferts
Andrew Ulferts Mar 04, 2022 7:07PM ET
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Muhuhahahaha!
Barani Krishnan
Barani Krishnan Mar 04, 2022 7:07PM ET
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Hey, how's the Tesla? Come on, tell everyone here that you own one, Andrew, and that you will not be going to pump while the other clods who are drooling from $100 oil will pay for inflation in so many other ways that it often ends up as a zero-sum game. Anyway, banter aside, hope all's well with you, mate and a happy weekend :)
Ramesh Shah
Ramesh Shah Mar 04, 2022 6:05PM ET
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I believe oil sud be $300 , 10 times $30 in 1980
Ramesh Shah
Ramesh Shah Mar 04, 2022 6:02PM ET
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Oil was $30 in 1980, 40 yrs later sud it be 5 times, like value of your home?
Barani Krishnan
Barani Krishnan Mar 04, 2022 6:02PM ET
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Ramesh Shah, you're forgetting about the multiplier effect of inflation. Oil accounts for approximately 3% of GDP. Being the commodity that literally powers and moves the planet, it is indispensable to the earth’s mobility. It is the underlying commodity in almost every commercial activity. Higher prices of oil lead to higher prices of gas, food, clothing and nearly every essential. If a barrel is priced 10 times more today than 40 years ago, where do you think inflation will be today? Your salary will probably have to be 3 times more at least. Do you think employers will be afford that? Just this year alone, wages of Americans went up like 8% and many of the smaller US employers had to close. No, it isn't as simple as you think.
Donald Schneider
Donald Schneider Mar 04, 2022 6:02PM ET
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Those small businesses are the core of the strength of the U.S. believe it or not. Those lost in 2008 mostly did not return, and this is likely a rerun. The greatness we are trying to return to is a long way off and these losses are extremely hard to rebuild. While Corporate America appears healthy, our core is quite damaged and oil prices have reached that point where the next recession will begin soon.
Donald Schneider
Donald Schneider Mar 04, 2022 6:02PM ET
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Oil was barely holding $50 just a few months ago, this run is uncontrolled and points to the stupidity of Biden shutting down the pipeline in his first day in office. Talk in Canada was to shift that line to their own west coast, which means those jobs planned for are gone.
Alan Rice
Alan Rice Mar 04, 2022 5:54PM ET
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Let' s see what happens when no one buys Russoil. (Thats a sanction !!)
peter neal
peter neal Mar 04, 2022 5:15PM ET
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Buy Gold. Everything is going to collapse. Kid you not.
Alan Rice
Alan Rice Mar 04, 2022 5:15PM ET
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Yeah. The sky is falling !! (but the market's not going anywhere.)
Barani Krishnan
Barani Krishnan Mar 04, 2022 5:15PM ET
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Alan Rice  Be careful what you wish for: If you get your $200 oil, OPEC's coffin will be truly sealed by the EVs.
King No
King No Mar 04, 2022 4:51PM ET
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Tehrans oil has been in the market. They never abide by their sanctions, circumventing barrels to china. Its laughable to watch biden push for the new iran deal, knowing they chant “death to america” in their parliment. Biden is a disgrace.
Donald Roberts
Donald Roberts Mar 04, 2022 3:54PM ET
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the Iranian will drown the Saudis in oil very soon they have stocked piled so.much...they will turn that into cash very soon.
Barani Krishnan
Barani Krishnan Mar 04, 2022 3:54PM ET
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That could happen, depending on how much they have stockpiled.
William Smith
William Smith Mar 04, 2022 3:39PM ET
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Amazing that one of Biden's first moves was to give in to middle East, Russia and the green movements pressure and ban the Keystone pipeline and cancelling American drilling leases, making the US once again prisoners to OPEC, Russia and the middle east for oil.  Those moves also put pricing back in OPEC'S  hands.  At the same time kicking Canada in the groin by telling them we dont want their oil.  Sad day for America.Amazing that one of Biden's first moves was to give in to middle East, Russia and the green movements pressure and ban the Keystone pipeline and cancelling American drilling leases, making the US once again prisoners to OPEC, Russia and the middle east for oil.  Those moves also put pricing back in OPEC'S  hands.  At the same time kicking Canada in the groin by telling them we dont want their oil.  Ofcourse that move enriched and emboldened Putin, ignited inflation and was a huge contributor to mess we are seeing today.  Sad time for America and the free world.
Barani Krishnan
Barani Krishnan Mar 04, 2022 3:39PM ET
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Try something else, Bill. getting tired of hearing a narrative everybody knows too well.
Barani Krishnan
Barani Krishnan Mar 04, 2022 3:39PM ET
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I have concurred with you in the past on Keystone, but I've also told you that fulfilling the green pledge was his campaign promise. Trump tried to fulfill what he campaigned on, and Biden is beholden to the far left unfortunately on this.
Lucas P
Lucas P Mar 04, 2022 3:39PM ET
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This isn't about clean air;global warming, it's about national security. That's what home grown oil affords us.
Barani Krishnan
Barani Krishnan Mar 04, 2022 3:39PM ET
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Lucas P  Depends which side of the bread is buttered and who butters it for you. As a form of technology, oil is 2 centuries old. Are you trying to tell me that we shouldn't try to evolve from fossils for another five centuries when every other sector is reinventing with quantum leaps? Come on. There's a measured risk in everything. Society doesn't progress without risk. The oil lobby of course will want to ensure the world never becomes independent of it.
Luis Moya
Luis Moya Mar 04, 2022 3:39PM ET
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Google energy density of energy and you will see how much technological advancement and subsidies are required to reach parity in reliability, abundance and cost of alternative energies vs. conventional energy.
Ric Later
riclater211 Mar 04, 2022 2:40PM ET
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S Aramco is just reacting to market forces. If Joe Biden would just open USA pipelines, prices would come down and stabilize. If you had the only oil in town wouldn't you raise your price? Let's go B. randon.
Barani Krishnan
Barani Krishnan Mar 04, 2022 2:40PM ET
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You would, of course, because history is ride with failures of people and entities who can never get enough of a good thing. The greater the crude price, the greater incentive for alternatives. Ultimately, the consumer is king.
 
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