Oil prices have risen as the Ukraine crisis deepens.
Oil prices jumped on Monday as President Vladimir V. Putin’s order to put his country’s nuclear forces on high alert dashed hopes of talks between Russia and Ukraine.
President Volodymyr Zelensky’s announcement that a Ukrainian delegation would meet for talks “without preconditions” with a Russian delegation near the Ukraine-Belarus border was viewed with suspicion by oil traders and most political analysts and Western officials.
Traders did not raise prices in recent days as Western sanctions against Russia have not hampered oil and natural gas exports to Western Europe so far. But the Brent oil benchmark climbed more than 3 percent on Monday to rise above $101 a barrel, while the US West Texas Intermediate benchmark climbed around $95 a barrel.
According to AAA Motor Club surveys, US gasoline prices have increased by about a penny a gallon every day during the past week. $3.61 per gallon for regular gasoline, about a dollar higher than the national average a year ago.
As Russia invades Ukraine, the risks of rising energy prices remain high. In the early days, the Russian offensive faced strong resistance from the Ukrainian armed forces and Ukrainian civilians.
Bombing and rockets could damage vital pipelines passing through Ukraine, although this has not yet happened. Some Republican leaders and members of Congress from both parties are pushing for tighter restrictions on energy transactions. Western oil companies may decide that doing business with Russia is not worth the risk, especially if Western technology and oil services are either affected by sanctions or financial sanctions will hinder Russian payments.
According to a report released on Sunday by RBC Capital Markets, “perhaps the biggest uncertainty will be the Russian response.” “Central bank sanctions will sharply reduce Russia’s access to the war chest of foreign exchange reserves and proceeds from the sale of oil to foreign accounts.”
The tough economic stance of the West against Russia is already taking its toll. BP said on Sunday that it would “pull out” from its nearly 20 percent stake in giant Russian company Rosneft, and that it would remove two of its representatives from the Rosneft board. It was a significant withdrawal from the British-based company after doing business in Russia for three decades.
Ukraine’s gas pipeline operators said on Sunday that natural gas transmission through the country to much of Europe was normal.
Russia’s stand will be another wild card at a meeting on Wednesday of OPEC Plus, in which it partners with Saudi Arabia and other major producers. The group is meeting to discuss how much to raise production levels to reduce global price increases. Washington has so far had little success in pressuring the group to increase production.
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