Daily Times

Crude oil prices surged 4 percent on Friday as international refiners are reluctant to do business with Russia As of 1345 hours GMT, Brent, the international benchmark for two-thirds of the world’s oil, gained $4.07 (+3.68 percent) to reach 114.53 a barrel. The benchmark has gained $16.21 a barrel during the last four days. The West Texas Intermediate (WTI), the main oil benchmark for North America, reached $112.05 a barrel, up by $4.38 (+4.07 percent). The contract has gained around $20.30 a barrel during the last four days. The price for Opec Basket was recorded at $112.20 a barrel with an increase of 8 percent, Arab Light was available at $107.30 a barrel with a decrease of 4.09 percent and the price of Russian Sokol slipped to $98.67 a barrel with 5.15 percent increase.

Although the US and its allies intentionally avoided targeting Russia’s energy supplies, they have hit the country with unprecedented financial sanctions. Those actions have made oil purchasers, like refineries, wary of the risks posed by future sanctions if they enter new contracts now. And prices for things like tankers are soaring as more companies refuse to do business with Russia. The surge in crude prices comes even as countries have taken steps to stabilise energy markets and bring down prices. Thirty-one countries, including the United States, have announced so far they would release a total of 60 million barrels of crude oil from their strategic petroleum reserves. The experts have warned that soaring energy prices are providing significant headwinds for developed economies, which could potentially trigger a recession. With inflation soaring and economic growth at a standstill, this is stoking stagflation fears. This is what the markets fear given the sharp rally in benchmark government bonds, gold and other haven assets.

On the other hand, crude oil production from Libya’s largest oilfield, El Sharara, has been suspended after the Hamada valve was closed by an unknown person or persons, according to various media reports. The El Sharara oilfield is responsible for the production of some 300,000 barrels of oil per day. The news of further oil production disruptions comes at a particularly worrisome time for the oil markets, which are already grappling with scant inventories, booming demand, and an invasion of Ukraine by Russia.