Oil volatile as dispute emerges among Western states on Russian oil sanctions

By Sibel Morrow

ANKARA (AA) - Oil prices showed wide fluctuations in early trade on Tuesday, after testing 14-year highs on Monday over a potential dissidence between the US and EU countries about sanctioning Russia’s oil and gas exports after it invaded Ukraine.

International benchmark Brent crude was trading at $127.40 per barrel at 0611 GMT for a 3.4% gain after closing the previous session at $123.21 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $122.62 per barrel at the same time for a 2.7% increase after the previous session closed at $119.40 a barrel.

Prices continued their rapid increase with Brent reaching $130 a barrel on Monday, despite ongoing worries that multi-year high oil prices may increase global inflation rates, negatively affect the global economic outlook and dent demand especially in the airline sector due to the estimated decline in international travel.

Despite the International Energy Agency’s (IEA) efforts to bring over 61 million barrels of crude to the market through emergency stockpiles, the gravity of the Russia-Ukraine war and the counter measures of the US and EU countries, including sanctions on Russian oil exports, were enough to bear down on global oil markets.

The US response to the question of unilaterally banning Russian oil imports also added more upward pressure on prices.

US Secretary of State Anthony Blinken on Sunday said: "I'm not going to rule out taking action one way or another, irrespective of what they do, but everything we've done, the approach starts with coordinating with allies and partners."

The country is also actively searching for alternative oil sources, including from the long US-sanctioned Venezuela.

The US is also the largest contributor to the IEA’s emergency stockpile plan, supplying 30 million barrels.

"The impact of a US unilateral ban would be minimal, only impacting about 100,000 bpd (barrels per day) of crude exports from Russia," said Rystad Energy’s Senior Oil Market Analyst Louise Dickson, adding that if the US can encourage Europe to participate in the embargo, the continent would be blocking about 3.8 million bpd monthly on average of Russian crude imports.

Meanwhile, Germany on Monday ruled out banning energy imports from Russia despite plans by the US and several European allies to adopt tougher sanctions on Moscow to stop the war in Ukraine.

"There is currently no other way of securing Europe's supply of energy for heating, for mobility, for power supply and industry," Chancellor Olaf Scholz said in a statement.

Talks over the possibility of prices reaching $200 per barrel have now begun, but Russian Deputy Prime Minister Alexander Novak said that if all of Russia's oil exports are blocked from global markets, oil prices could even rise to more than $300.