Washington (Times Of Ocean)- As a result of reports that Russian and Kazakhstan oil exports via the Caspian Pipeline Consortium (CPC) from the Black Sea will be halted for one and a half months, Brent oil price spiked to $120 dollars a barrel.
Brent crude traded at $120.50 per barrel at 1425 GMT, an increase of 4.34% after closing at $115.48 a barrel the previous session.
At the same time, the American benchmark West Texas Intermediate (WTI) closed at $113.61 per barrel, up 3.97% from the previous close of $109.27.
In a warning on Tuesday, Russia warned that storm-damaged berths could reduce oil flow by up to 1 million barrels per day (bpd), or 1% of global oil production.
In addition to the one-month disruption, the US announced new sanctions against Russia, which may include EU bans on Russian oil.
Jake Sullivan, the US National Security Advisor, said Joe Biden would announce the new economic penalties as part of a coordinated effort with US partners. He also vowed to further tighten existing sanctions in order to crack down on “evasion, and ensure robust enforcement.”
The vice president will attend a series of meetings in Brussels beginning March 24 to discuss ongoing western concerns about Russia’s war in Ukraine.
In contrast, not all EU countries are eager to impose sanctions on Russia’s oil and gas sector, as Germany reiterated its opposition to energy sanctions on Russia on Tuesday, stating that it would have negative consequences for the European economy.
Germany’s Chancellor Olaf Scholz said European countries should carefully evaluate the proposed measures.
“Sanctions should have an effect on the aggressor, but at the same time, we should make sure that they have minimal repercussions for our economies, and we should be able to uphold them,” he said.
Scholz stated that many EU countries, including Germany, still must buy their gas, oil, and coal from Russia since there are no other alternatives in the short term.
Ruble payments instead of dollar for ‘unfriendly countries’
Brent oil prices rose after Russian President Vladimir Putin announced he instructed the government to convert payments for Russia’s energy resources coming from “unfriendly countries” into rubles.
In a meeting with the Russian government in Moscow, Putin said that after the US and EU sanctioned the Russian state debt in euros and dollars, which in economic terms means that they have defaulted on their financial obligations to Russia, there is no reason to use these currencies anymore.