The US Moves to Ban Russian Oil
March 8, 2022
The super rally continues as US lawmakers announce the outline of bipartisan legislation to ban imports of Russian oil. Russia countered and said if the US does ban imports, it will cut gas supplies to Europe. This news has pushed ULSD NYMEX Futures up 38 cents as of this writing as fear grips the market.
Energy prices for crude oil and refined fuels products closed yesterday at near 14-year highs, and prices are higher again so far today.
Bank of America analysts stated that crude oil prices could reach $200 per barrel if Russian oil exports are completely cut off, causing a shortage of 5 million BPD or more in the market.
Despite all the news of shortages and fear, there are some bearish factors out there. The US is talking with Venezuela about what needs to be done to lift sanctions and get some crude oil out of there. The US dollar index has rallied to a new 22-month high and the Federal Reserve is planning to raise interest rates. These factors are vastly overshadowed.
There has been speculation that President Biden might make a trip to Saudi Arabia to get Riyadh to increase production. The White House said this is premature speculation and no trip is planned.
All the talk about banning Russian energy and Russia’s talk of retaliation by cutting gas supplies has fueled a big rally in prices. The world’s concerns about limited barrels of oil drive up prices trying to slow demand. Prices at the pump continue to move up, but US demand has not shown a significant reduction yet. Prices will continue to climb to find that point at which demand is impacted.