By Barani Krishnan
Investing.com -- Oil prices jumped almost 5% Monday as a raft of new sanctions throttled Russia’s economy and exports, including its prized crude that’s valuable to both Moscow and the world, as the West stood steadfast in punishing President Vladimir Putin for his invasion of Ukraine.
By 3:30 PM ET (20:30 GMT), London-traded Brent, the global benchmark for oil, was up $3.79, or 4%, at $97.71 a barrel for its May delivery contract. The intraday high was $100.25.
Earlier, U.S. crude’s West Texas Intermediate, or WTI benchmark, settled up $4.13, or 4.5%, at $95.72 for its April delivery contract. WTI hit a session peak of $98.94.
The United States, Britain, Europe and Canada blocked the access of various Russian banks to the SWIFT global interbank payment system — squeezing the billions of dollars the country trades a day in oil and other commodities — as Putin’s forces ravaged Ukraine for a fifth straight day.
The West had taken pains initially not to target Moscow’s energy exports with sanctions due to its own reliance on Russians oil and gas.
But over the weekend, that mindset clearly changed, with EU officials affirming on Monday their plan to wean the bloc from its dependence on Russian energy, while being prepared to suffer in the short-term from spiraling oil and gas costs due to that decision.
“The oil market will remain very volatile as the risk of losing access to Russian energy supplies grows,” said Ed Moya, analyst at online trading platform OANDA. “The uncertainty over how the Ukraine war will unfold has too many risks that include nuclear threats, which means any oil price dips on any strategic release announcement will be short-lived.”
On a wider industry front, Russia was paying a bigger price for its incursion of Ukraine.
British oil giant BP (NYSE:BP) said Sunday that it is “exiting” its $14 billion stake in Russian oil giant Rosneft.
Shell (LON:RDSa) said it will exit all its Russian operations, including a major liquefied natural gas plant. Norway's Equinor also plans to exit Russia.
Global oil producer alliance OPEC+, meanwhile, is expected to stay with its gradual output increase strategy when it meets this week, ignoring calls from consuming nations for increased output.
But crude prices also have the potential to drop in the near-term depending on the outcome of Iran nuclear talks and the plan by the United States and its allies to release some 70 million barrels of crude from their oil reserves.
Iran said on Monday efforts to revive a 2015 nuclear deal could succeed if the United States took a political decision to meet Tehran's remaining demands, as months of negotiations enter what one Iranian diplomat called a "now or never" stage. A successful outcome to the talks could pave the way for the legitimate return of Iranian oil to the market, after U.S. sanctions imposed since 2018.