Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

Oil Jumps Over 7% as Russia Isolation Triggers Shortfall Fears

Commodities Feb 28, 2022 12:02
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2/2 © Bloomberg. The Sinclair Wyoming Refining Co. oil refinery in Sinclair, Wyoming, U.S., on Thursday, Feb. 24. 2022. Oil extended its retreat from a seven-year high, slipping back below $100 a barrel in London, as Russia’s invasion of Ukraine forced traders to grapple with a fluid market environment. Photographer: Bing Guan/Bloomberg 2/2

(Bloomberg) -- Oil soared at the open as energy and commodity markets were thrown into a state of disarray after Western nations unleashed more sanctions to isolate Russia following its invasion of Ukraine.

West Texas Intermediate and Brent rose more than 7% in early Asian trading. The U.S. and its European allies agreed over the weekend to exclude some Russian banks from the SWIFT messaging system and target the central bank’s international reserves. BP (NYSE:BP) Plc also moved to dump its shares in Rosneft PJSC, taking a financial hit of as much as $25 billion.

Commodity and financial markets are bracing for further turmoil from the growing fallout from Russia’s invasion of Ukraine and the West’s response via sanctions. Both WTI and Brent topped $100 a barrel last week before retreating after the U.S. reiterated its decision not to sanction Russian energy exports.

Worldwide oil output is already struggling to meet the rebound in consumption fueled by the reopening of economies, and any disruptions to Russian flows will only exacerbate this. Separately, production outages in Iraq added to concerns of already-tight supplies, with OPEC+ expected to stick to its plan of only gradually increasing supply when it meets this week.

The surprise move by BP is the latest sign of how far Western powers are willing to go to punish President Vladimir Putin for his invasion of Ukraine. The oil major has been in Russia for three decades and just weeks ago was staunchly defending its presence there.

Societe Generale (OTC:SCGLY) SA and Credit Suisse (SIX:CSGN) Group AG stopped financing commodities trading from Russia, according to people familiar with the matter. The two banks, key financiers to commodity trade houses, are no longer providing the money needed to move raw materials such as metals and oil from Russia, said the people, who asked not to be named because the information is private.

OPEC+ will probably stick to its plan of only gradually increasing oil production when it meets this week to decide on targets for April, according to several delegates. Last week’s jump in prices did not reflect an imbalance between supply and demand, and the alliance should continue adding 400,000 barrels a day to the market each month. 

The U.K. would support Group of Seven nations setting limits on the amount of Russian oil and gas its members could import “over time,” Foreign Secretary Liz Truss said, in a potential escalation of the impact of the war in Ukraine on energy markets. Russia’s military “is funded by revenues from oil and gas, so what we have to do is reduce dependency on oil and gas,” Truss told Sky News on Sunday. 

©2022 Bloomberg L.P.

Oil Jumps Over 7% as Russia Isolation Triggers Shortfall Fears
 

Related Articles

Oil slides 2% on rising U.S. fuel stocks and output
Oil slides 2% on rising U.S. fuel stocks and output By Reuters - Jun 30, 2022

By David Gaffen NEW YORK (Reuters) -Oil prices slid about 2% on Wednesday as a rise in U.S. gasoline and distillate inventories and worries about slower economic growth around the...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Continue with Google
or
Sign up with Email