Oil Prices Rise as Sanctions Escalate on Russia

Oil prices jumped on Monday as Western allies imposed more sanctions on Russia and cut off certain Russian banks from the global SWIFT system for interbank payments, potentially causing severe disruption to its oil exports.

Brent crude rose $4.16, or 4.3 percent, to $102.09 at 0915 GMT, after hitting a high of $105.07 a barrel in early trading.

US West Texas Intermediate crude rose $4.19, or 4.6 percent, to $95.78 a barrel, after reaching $99.10 in early trading.

“The measures taken by the United States and Europe to isolate some Russian banks from the Swift system have raised fears of supply disruptions…in the near term,” said Daniel Haynes, commodity strategist at ANZ.

Russia’s exports of all goods, from oil to grain, are facing severe disruption after Western countries imposed tough sanctions on Moscow and isolated some Russian banks from the SWIFT system.

Russian oil represents about 10 percent of the world’s oil supply.

As the war on Ukraine continues, the Organization of the Petroleum Exporting Countries (OPEC), Russia and its allies, a group known together as OPEC+, are scheduled to meet on March 2. The group is expected to stick to plans to pump 400,000 barrels per day of supplies in April.

Prior to the meeting, OPEC + lowered its forecast for the oil market surplus for 2022 by about 200,000 barrels per day to 1.1 million barrels per day, which confirms the lack of supply in the market.

Meanwhile, a separate report showed that in January, OPEC + produced less than its agreed targets by 972,000 barrels per day.