Oil prices rose on Tuesday, with Brent surging past $127 a barrel, as Russia issued an warning that oil could reach $300 per barrel if trade restrictions as a result of formal sanctions are imposed by Western countries or other nations against Moscow’s wishes.
The WTI oil futures spiked to over $130, the highest since mid-2008 on Monday after U.S. Secretary of State Antony Blinken said the White House and its European allies were considering banning Russian oil imports.
Following Secretary Blinken ‘s statement, Russian Deputy Prime Minister Alexander Novak said on state television that it was “absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market”.
“The surge in prices would be unpredictable,” he said. “It would be $300 per barrel if not more.”
Russia is one of the world’s leading oil producers, and apparently is not shy about using its energy resources as leverage. It is the world’s biggest exporter of natural gas.
European countries are particularly vulnerable to any supply disruptions from Russia, as they get about 40% of their gas from Moscow.
Novak said it would take Europe more than 12 months to replace the volume of oil it gets from Russia.
Kremlin has been increasingly at odds with the West since its annexation of Crimea from Ukraine in 2014. Sanctions have been ratcheted up over the past two weeks following Putin’s brutal invasion of Ukraine.
WTI crude futures were last trading up $2.50, or 2.09%, to $121.90/bbl while Brent is up $3.09, or 2.51%, to $126.30/bbl.