Crude oil prices rose $3 on Monday, with Brent topping $110 a barrel, as European Union countries ponder joining the US in a Russian oil embargo, while a weekend attack on Saudi oil installations sparked fears.
Brent oil futures were up $3.44, or 3.2 percent, to $111.37 a barrel by 0443 GMT, following a 1.2 percent gain the previous day.
WTI oil futures in the United States climbed $3.54, or 3.4 percent, to $108.24, following a 1.7 percent gain from Friday.
Prices rose ahead of discussions between European Union countries and US President Joe Biden this week for a series of summits aimed at toughening the West’s reaction to Moscow’s invasion of Ukraine.
The EU is debating whether or not to impose an oil embargo on Russia. Iryna Vershchuk, Ukraine’s deputy prime minister, said early Monday that the country’s military in the besieged eastern port city of Mariupol had no possibility of surrendering.
With no signs of the war diminishing, the question of whether the market could replace Russian barrels affected by sanctions resurfaced.
“Oil prices have risen in Asia as a result of a Houthi attack on a Saudi energy facility, OPEC warnings of a structural shortage in output, and a prospective European Union oil embargo on Russia,” wrote OANDA senior analyst Jeffrey Halley in a note.
“Even if the Ukraine war stops tomorrow, due to Russian sanctions, the world would confront a fundamental energy shortage.”
Attacks by Yemen’s Iran-aligned Houthi group resulted in a temporary reduction in output at a Saudi Aramco joint venture in Yanbu over the weekend, adding to concerns in a nervous oil products market where Russia is a key supplier and global stockpiles are near multi-year lows.
According to the latest report from the Organization of Petroleum Exporting Countries and its allies, which includes Russia and is known as OPEC+, certain suppliers are still falling short of their agreed-upon production targets.
Sources say that OPEC+ missed its production target by more over 1 million barrels per day (bpd) in February, despite its agreement to increase output by 400,000 bpd per month as they reverse significant cutbacks taken in 2020.
Saudi Arabia and the United Arab Emirates, the two OPEC members with the ability to rapidly increase supply, have so far rejected pleas from big consuming nations to increase production quicker in order to help bring down oil prices.
Despite high prices, US energy companies are battling to maintain the number of operating oil rigs.
The International Energy Agency outlined ideas on Friday to decrease oil usage by 2.7 million bpd in four months, ranging from carpooling to lower speed limits and cheaper public transportation, in response to the dismal supply forecast and high prices. find out more
This would help counterbalance the 3 million bpd of Russian crude and products expected to be off the market by April, according to the IEA.
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