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Oil Up, Reaction to U.S. and U.K. Ban on Russian Oil Continues

Published 03/08/2022, 11:58 PM
Updated 03/09/2022, 12:04 AM
© Reuters

By Gina Lee

Investing.com – Oil was up on Wednesday morning in Asia, as a U.S. ban on Russian oil imports and the U.K.’s plan to phase them out by the end of 2022 raised worries about tightening supply.

Brent oil futures jumped 2.27% to $130.89 by 11:57 PM ET (4:57 AM GMT) and WTI futures rose 1.70% to $125.80.

The U.S. on Tuesday imposed an immediate ban on Russian oil and other energy imports, while the U.K. will phase out Russian oil imports through the end of 2022. The moves are the latest sanctions in reaction to Russia’s invasion of Ukraine on Feb. 24, and fears of further supply disruptions have boosted buying, according to some investors.

"On top of the U.S. and U.K.'s announcement effects, fears of further disruptions of supply from Russia due to intensifying sanctions on Moscow prompted fresh buying," Nissan Securities general manager of research Hiroyuki Kikukawa told Reuters.

"But Monday's highs will likely become a ceiling for the short term as speculative buying is expected to slow down soon and countries in the northern hemisphere are headed to spring when fuel demand drops," he added.

Oil on Monday jumped to its highest levels since July 2008, with Brent futures hitting $139.13 a barrel and WTI futures $130.50. Investors also continue to monitor talks on reviving a 2015 Iran nuclear deal, which could add Iranian crude to the market. However, talks between Iran and world powers have slowed.

Global oil prices could rise to $200 a barrel if Europe and the U.S. ban imports of Russian oil, Rystad Energy analysts said on Tuesday.

The black liquid remains near its highest level in 14 years, but the fuel demand that has recovered somewhat from COVID-19 is set to fall as consumers react to higher prices, some energy executives warned on Monday.

Meanwhile, U.S. crude oil supply data from the American Petroleum Institute showed a build of 2.811 million barrels for the week ending Mar. 4. Forecasts prepared by Investing.com predicted a draw of 833,000 barrels, while a 6.1-million-barrel draw was recorded during the previous week.

Investors now await crude oil supply data from the U.S. Energy Information Administration, due later in the day.

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