Oil and gas soar amid possible embargo against Russia

Discussions in Washington around a possible embargo on all Russian oil exports have led to an unprecedented surge in oil prices on the markets. This Monday, the barrel of Brent, the European benchmark for oil, took up 17.8% to reach 139.13 dollars. WTI, the American benchmark, followed the same trend, rising by 12.81%.

In the early morning, black gold lost some of its gains and traded around 130 dollars, unheard of since 2008, the year of its historic record at 147.5 dollars.

8% of imports

The United States plans to ban all imports of Russian hydrocarbons on American soil, even if their European allies do not take a similar measure. 8% of oil imports in the world are Russian oil imports.

According to Secretary of State Antony Blinken, the White House is actively discussing with the Europeans a new round of sanctions against the Putin regime.

De facto embargo

Until now, the Biden administration had refused to directly sanction Russian oil, fearing an impact on prices that would be too great for consumers.

Despite these precautions, “the market had already integrated a tension on the offer, due to voluntary reductions in imports and logistical difficulties around the Black Sea”, explain the analysts of ING.

Up to $200?

In this context, soaring prices are inevitable, say analysts. JPMorgan expects a barrel at 185 dollars by the end of the year. Others do not hesitate to bet on a Brent at 200 dollars. On the options market, more and more traders are taking this bet.

For star manager Pierre Andurand at the head of a hedge fund specializing in oil, prices could even rise beyond that. Taking inflation into account, the 2008 record high of $147 corresponds to a price of $222 today, he notes.

Due to the surge in oil, the price at the pump is also soaring. A liter of gasoline is gradually crossing 2 euros almost everywhere in France.

All-time gas record

Gas prices also soared at the start of the week. The reference contract in Europe, the TTF delivered to the Netherlands soared by 30% to 260 euros per MWh, a new historical record. Russia provides Europe with a third of the gas it consumes for heating or to produce electricity.

Doing without Russian gas would be an “extreme scenario”, explained to “Echos” Catherine MacGregor, director of Engie. The public authorities would be forced to intervene to ration demand and calm prices. Gas flows remain unchanged for the moment, despite the war in Ukraine, but market operators fear that this will no longer be the case in the future.

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