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New York: Oil pushed higher in Asia before an OPEC+ meeting as the International Energy Agency warned that global energy security is under threat after Russia's invasion of Ukraine.
Futures in New York rose above $106 a barrel after surging 8% in the previous session. The situation in energy markets is very serious, IEA Executive Director Fatih Birol said Tuesday after the U.S. and other major economies agreed to a release of oil reserves. OPEC+ meets later Wednesday to discuss April supply, but only a modest increase is expected despite the market turmoil.
The global oil market had already tightened significantly prior to the invasion after economies rebounded strongly from the pandemic, and any disruption to Russian exports has the potential to drive prices even higher. Russia's flagship Urals crude was offered for sale at a record discount but found no bidders, highlighting the caution from buyers as they navigate mounting sanctions.
Governments worldwide are facing rising inflationary pressure as the fallout from Russian sanctions drives energy, metals and grains prices higher. That's prompted the U.S. and its allies to release 60 million barrels of strategic oil reserves to tame prices, though similar action late last year had little impact.
Meanwhile, President Joe Biden is facing pressure from lawmakers in both parties to cut off U.S. imports of Russian oil and gas to escalate the cost to Russia, which would likely provide another boost to global prices. Saudi Arabian crude is poised to get more expensive next month as buyers chase extra cargoes, with China shaping up as a potential outlet for shunned Russian oil.
The impacts of Russia's invasion of Ukraine has reverberated far and wide. Oil majors such as BP Plc and Shell Plc are exiting Russia, while banks across the globe including in Singapore are restricting trade financing for raw materials. Even a tiny archipelago off Scotland is doing everything they can to stop a Russian oil tanker from docking.
