Mon. May 16th, 2022

The costs spiked this high for the first time since 2008

Crude oil prices jumped to their highest levels since 2008 on Monday, amid fears of a ban on Russian oil imports due to Moscow’s military operation in Ukraine, as well as delays in talks on a nuclear deal with Iran.

Global benchmark Brent crude rose $8.35, or 7.07%, to $126.46 a barrel by 10:00 GMT, while US benchmark West Texas Intermediate (WTI) crude spiked $8.33, or 7.2%, to $124.01.

On Sunday, both benchmarks surpassed the $130 per barrel threshold for the first time since July 2008 with Brent at $139.13 a barrel and WTI at $130.50. US gasoline prices at the pump followed the surge in crude prices, jumping 11% over the past week and topping $4 for the first time in almost 14 years, US Gasoline price provider GasBuddy said on Sunday.

The price surge comes amid a stall in talks aiming to revive Iran’s 2015 nuclear deal following Russia’s demands for a US guarantee that Western sanctions it faces over its military operation in Ukraine will not hurt Moscow’s trade with Tehran. In response to Russia’s inquiry, US Secretary of State Antony Blinken said on Sunday that the sanctions imposed on Russia over Ukraine would not interfere with a potential nuclear deal with Tehran.

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Meanwhile, Washington and the EU have been in talks over the prospect of banning imports of Russian oil. Europe heavily relies on Russia in oil and natural gas supplies but became more enthusiastic about the notion of banning Russian energy products over the weekend, Reuters reported citing a source familiar with the discussions.

Analysts from JP Morgan said this week oil could soar to $185 per barrel this year.

Russia exports roughly 7 million barrels per day of oil and refined products, around 7% of global supply. According to analysts at the Bank of America, if most of Russia’s oil exports are banned, the shortfall would lead to oil prices reaching $200 a barrel. Iran, whose oil exports could potentially cover for some of the shortfall, would still take several months to restore oil flows after the nuclear deal is reached, analysts claim.

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