(LONDON) Oil prices climbed more than 5% on Tuesday as US President Joe Biden prepares to announce an embargo on Russian oil in the United States, according to news reports.
The idea that the world’s largest consumer of black gold will have to do without Russian crude because of the conflict in Ukraine pushed the price of Brent North Sea, European benchmark, to 130.59 dollars (+ 5.99%) around 9:50 a.m.
A barrel of West Texas Intermediate (WTI), the American benchmark, for delivery in April gained 6.72% to 127.42 dollars.
After a slight lull on Tuesday morning, prices were again approaching their highs since 2008, reached on Monday, at 139.13 dollars for Brent and 130.50 dollars for WTI.
As fighting continues in Ukraine, investors are focused on the idea that oil will be directly affected by sanctions from the United States, according to press reports.
The head of state is due to speak at 10:45 a.m. to “announce actions aimed at sanctioning Russia for its unjustified and unprovoked war” against Ukraine, the White House said on Tuesday.
Joe Biden thus stands out from his European counterparts, who have so far refused an embargo. Europe as a whole is much more dependent on Russian supplies, which represent 40% of its natural gas consumption and around 30% for oil.
In contrast, only 8% of US imports of crude oil and petroleum products came from Russia in 2021, and the United States does not import Russian gas.
“Concerns about such an announcement are driving up prices,” comments Fiona Cincotta, analyst at City Index, who points out that this “fuels fears about inflation”.
Second world exporter, “Russia is not a producer whose extractions can be easily compensated by others”, underlines Giovanni Staunovo, analyst at UBS.
Some oil buyers already avoid buying from Russian companies as much as possible: “All of them remember the sanctions suffered by European companies that had traded with Iran when this country was under sanctions”, explains Benjamin Louvet, analyst at OFI AM.
Volatile, the price of European gas, which had reached a historic high of 345 euros per megawatt hour on Monday, was down 5.4% on Tuesday to 215.00 euros.
“The market was partly reassured by the German Chancellor who said that the sanctions would not affect gas,” commented Barbara Lambrecht of Commerzbank.