Amid reports that the United States and Britain would announce formal ban on Russian oil imports, oil prices rose on Tuesday as fears of shortage of supply mounted.
Benchmark Brent crude for May had climbed by almost 7% to $131.8 a barrel by 1517 GMT. U.S. crude for April delivery was up 7% at $127.82.
Prices climbed after a source said the United States, the world’s biggest oil consumer, could announce a ban on Russian oil imports as soon as Tuesday in response to Russia’s invasion of Ukraine.
The White House said US President Biden would announce actions to hold Russia accountable at 1545 GMT after sources said Washington was willing to impose such a Russian oil import ban even without its European allies.
Britan is also expected to announce at 1600 GMT a ban on Russian oil imports, Politico reported, citing Whitehall officials.
The ban is expected to be a gradual phasing out over time and is expected to last about a year to try to stop people panic-buying fuel.
An import ban by Europe and the United States on Russian oil could send global oil prices to $200 a barrel, analysts at Oslo-based consultancy Rystad Energy said on Tuesday.
Russian Deputy Prime Minister Alexander Novak said prices could rise to more than $300 a barrel.
Many buyers are already avoiding Russian oil to avoid becoming entangled in existing sanctions.
Shell said it would stop all spot purchases of Russian crude after drawing criticism for a purchase on March 4.
Goldman Sachs raised its Brent forecast for 2022 to $135 from $98 and its 2023 outlook to $115 a barrel from $105, saying that the world economy could face the “largest energy supply shocks ever” because of Russia’s key role.
Dimming expectations of an imminent return of Iranian crude to global markets have added to upward pressure on prices amid a slowdown in talks between Tehran and world powers over its nuclear activity.
Oil supply disruptions come as inventories continue to fall worldwide. Five analysts polled by Reuters estimated on average that U.S. crude stockpiles decreased by about 800,000 barrels in the week to March 4.
(With inputs from agencies)