Brent crude oil (BZ=F), the international benchmark, climbed to over US$119 (£89) a barrel to a 10-year high yesterday Thursday as the war in Ukraine continues to stoke supply concerns.
It briefly touched US$119.30, its highest level since March 2012, before later retreating slightly meaning Brent has gained US$20 in just a week since Russian troops pushed into Ukraine.
West Texas Intermediate (CL=F) was also trading above US$115 on the day, its highest since 2008.
It comes as the US has targeted Russia’s oil refining sector with sanctions, with the possibility that its oil and gas exports will be next on the list.
Earlier this week, the US, along with Japan and other major consumer nations, agreed to release 60 million barrels from their stockpiles in an attempt to stabilise global energy markets.
However, Russia’s key role as an exporter of oil and gas is driving more chaos in energy markets, while the region’s importance for other key commodities means panic is spreading through markets.
After the US and Saudi Arabia, Russia is the third largest oil producer globally, and is also the world’s largest natural gas exporter.
“With OPEC+ refusing to respond to the sharp spike in oil prices by sticking to its 400,000 barrels per day increase in output in March and with the market unfazed by the IEA’s global crude reserve release, the geopolitical tensions look set to push oil prices higher with Brent crude on track to breach US$120 or even US$125 as the next major resistance hurdles,” Victoria Scholar, head of investment at Interactive Investor, said.
Russian deputy prime minister Alexander Novak, who attended the OPEC+ talks on Wednesday, said he hoped oil market volatility would ease and that Russian output was expected to reach pre-pandemic levels in May.
Meanwhile, benchmark European natural gas prices jumped as much as 20% to €198 per megawatt-hour on Thursday.
The Dutch April gas futures contract has gained more than 12% to €186 per megawatt hour, setting a new record, while the UK equivalent is also approaching the record high hit at the end of last year.
It is currently 8.3% higher at 426.9p per therm, not far from the all-time high of around 450p in December.
UK drivers are now facing record petrol and diesel prices amid soaring oil prices. February marked the fourth month of rising fuel prices with petrol and diesel both shooting up by £4.5p a litre to new record highs, according to RAC.
Energy analysts warn prices could even reach £1.60 a litre causing yet more pain for motorists with no end in sight.
“February was undoubtedly a shocking month for drivers. A rise of 4.5p in any month is bad enough but when it takes pump prices to record levels, it’s bound to hurt households across the UK,” said RAC fuel spokesman Simon Williams.
“Motorists are having to endure successive months of rising prices and, sadly, it doesn’t look as though February will be the last.”
Govt intervention needed
Meanwhile, Executive Director of the Institute for Energy Security, Nana Amoasi VII, told Joy Business that government must intervene to cushion consumers against the shocks, calling for a revitalization of the Tema Oil Refinery.
“We expect government to put in measures to stop the consistent rise in fuel prices on our local market. Of course there are ways to deal with this.”
The Executive Secretary of the Chamber of Petroleum Consumers, Duncan Amoah, also believed although consumers’ should embrace price hikes at the pumps, an alternative measure can be put in place by government.
“We’re not surprise that crude oil move from $96 overnight to $102. We are certain that if these tensions continue, we could be hitting $110 and probably $120 in no time”.
“We expect the authorities to sit immediately and devise a proper containment strategy as far as pump prices is concerned. Once international market prices go up, Ghana as an oil producing and exporting country is simply going to get a lot more revenue”, he stressed.
OPEC decision to increase output to 400,000 barrels supported price surge
Reports also say the decision by OPEC+ to maintain an increase in output by 400,000 barrels per day (bpd) in March 2022, despite the price surge to record highs also supported the prices.
“We expect WTI prices could test $120 a barrel and Brent prices could test $125 a barrel in the upcoming sessions,” Rahul Kalantri, Vice President for Commodities, Mehta Equities in India said.
The incessant rise in the price of crude oil is a major worry to most global economies.
Meanwhile, some leading players in the petroleum downstream industry have begun increasing prices at the pumps.
For instance, Shell is selling a litre of diesel and petrol at GH¢8.29 respectively.
It’s coming after Total Oil increased its prices by a similar margin.
Many Oil Marketing Companies, largely medium and small ones are also waiting to take a cue from GOIL before adjusting their prices at the pumps.
