Oil surged for a third day as the war in Ukraine neared the one-month mark with no conclusion in sight.
Brent topped $111 a barrel, up 14% since its close last Wednesday. The European Union will consider a Russian oil embargo this week, with U.S. President Joe Biden due in the region for NATO, Group of 7 and EU summits, Reuters reported. The Kremlin said any such ban would harm everyone.
In studying new sanctions, “it is unavoidable to talk about the energy sector,” Lithuanian Foreign Minister Gabrielius Landsbergis said before a meeting of EU foreign and defense ministers in Brussels. The group will talk about oil because it’s “quite easily replaceable” and generates the most revenue for the Russian budget, he said.
The global oil market has been pitched into turmoil by Russia’s invasion of Ukraine, with the U.S. and Europe imposing penalties on Moscow and crude buyers shunning the country’s cargoes. Brent neared $140 a barrel earlier this month to hit the highest since 2008, before easing. Prices have seen unprecedented volatility, with frequent intraday swings of about $10 and broader commodity markets seizing up amid a widespread liquidity crunch.
“This morning’s price bounce suggests that the oil surge is resuming and may have the legs to carry on for weeks to come,” said Stephen Brennock, an analyst at PVM Oil Associates. “Russian supply uncertainty will likely be a familiar theme for the foreseeable future and will keep price volatility at the higher end of the spectrum.”
The Biden administration is stepping up its response to Russia’s invasion. Later Monday, officials will brief energy companies including Exxon Mobil Corp. as well as banks on the war and ensuing sanctions. Separately, Biden is due to call counterparts in Europe before traveling to the region later this week.
As the war continues, the world’s three biggest oilfield-service providers are scaling back work in Russia. On Saturday, Baker Hughes Co. said it’s suspending new investments in operations there. That followed a similar statement by Schlumberger on Friday. Halliburton Co., the top provider of fracking services, has halted current and future work in the country.
The rally in oil prices has spurred importing nations to pressure other producers to step up supply, including members of the Organization of Petroleum Exporting Countries. At the weekend, Japan urged the United Arab Emirates to increase exports. Meanwhile, oil giant Saudi Aramco plans to raise spending as it seeks to boost output.
Yemen’s Houthi rebels attacked at least six sites across Saudi Arabia late Saturday and early Sunday, including some run by Aramco. The Iran-backed group targeted a fuel depot in Jazan in the southwest of the kingdom and a natural gas plant in the Red Sea city of Yanbu.