By Barani Krishnan
Investing.com -- Crude prices posted double-digit weekly gains and closed at their highest in at least nine years after the White House said it was considering a ban on Russian oil imports, adding to the worries of a market already hyped up about sanctions on one of the world’s largest energy exporters.
The escalating war in Ukraine and the West’s retaliation with more financial punishments on Moscow further fueled Friday’s crude. Another catalyst was Saudi Arabia’s announcement of a record hike in the selling price for its crude.
U.S. crude’s West Texas Intermediate, or WTI, benchmark settled up $8.01, or 7.4%, at $115.68 a barrel, its highest close since 2008.
For the week, U.S. crude was up about 26%, its biggest weekly gain since March 2020.
Global oil benchmark Brent was up $7.65, or 6.9%, at $118.11 a barrel. For the week, Brent rose 21% for its biggest weekly gain since April 2020.
WTI has risen some 54% since the year began and Brent about 52%. Crude’s rally saw a dramatic surge this week on worries that a litany of sanctions against Russia for its invasion of Ukraine would severely impact energy exports from Moscow, which provides some 10% of the world’s oil needs and 40% of Europe’s gas requirements.
The White House said on Friday it was considering banning Russian oil imports to add to the global community’s isolation of Moscow over the war in Ukraine. No decision has been made on the matter, it, however, said.
Biden administration officials have said over the past week that they did not wish to act rashly and ban oil Russian exports, which could dramatically raise energy prices for Americans already paying the most for fuel since the 2008 financial crisis.
Saudi Arabia’s state-owned oil company Aramco (SE:2222), meanwhile, announced the highest hike ever in the official selling price, or OSP, to Asia, raising the premium for a barrel of Arab light crude meant for April delivery by $4.95 versus the Oman/Dubai average which it uses as its base.
Aramco said its April Arab light crude oil OSP to the US would go up by $3.45.
The lowest increase was for North West Europe, where the premium for April Arab light crude rose by $1.60 versus Brent, which hovered at $114 a barrel.
“This is what you call naked exploitation,” John Kilduff, partner at New York energy hedge Again Capital, said, referring to Aramco’s record price hike. “We know it’s business. But at a time when the world is in a dire emergency over the Russia-Ukraine crisis and the need for affordable and higher oil supplies is more than ever, we know we can count on the Saudis to throttle our necks more than ever.”
Crude prices briefly retreated on Thursday after headlines suggested brisk progress in talks between Iran and global powers to reactivate Tehran’s 2015 nuclear deal that could free the Islamic Republic itself from U.S. sanctions on its oil.
Iranian media quoted Mikhail Ulyanov, Russia’s chief negotiator at the nuclear talks, as saying an agreement was likely over the next few days, paving way for the legitimate return of Tehran’s oil to the market.