After US Secretary of State Anthony Blinken publicly mused about the possibility of slamming Russia with an all-out oil embargo, oil prices spiked on Monday to their highest levels since 2008.
Brent crude reached $139.13 and US West Texas Intermediate (WTI) hit $130.50 In the first few minutes of trade although prices had lost some of the gain couple of hours later, with Brent settling up 5.6%, at $124.71 per barrel, and WTI up 5.8%, at $122.35.
Blinken pointed out on Sunday there are active international efforts about banning Russian oil’s import while ensuring there’s still an appropriate supply of oil on world markets, and that the White House coordinates with key Congressional committees to move forward with their own ban.
If most of Russia’s oil exports are cut off, the estimates of the Bank of America’s analysts point that there could be a 5 million BPD or larger shortfall, which means oil prices could skyrocket to $200.
That would be a strong downside for working people in the US, where the average price of gas topped $4 per gallon Sunday, the first time since July 2008.
However, Alaska Senator Lisa Murkowski and West Virginia Senator Joe Manchin, both coming from energy-rich states found a way to turn this into an advantage by proposing their so-called “Ban Russian Energy Imports Act” which, if becomes law, will see US fossil fuel companies likely to see record profits in the coming years.
Just as a reminder, both senators’ campaign coffers are heavily based on those companies.
The US focusing on eliminating Russian oil from the world’s supply also creates an opportunity for a number of other oil-producing nations and a breathing room to be enjoyed by the US government’s previous targets.
Meanwhile, as Western sanctions hit Western consumers hard too, the Biden administration is looking to erstwhile enemies to plug the gap, announcing just a day prior a surprise visit to Venezuela to secure an alternate source of oil.
As Washington looks to isolate Russians from the global economy, Biden’s advisers are also mulling a trip to Saudi Arabia, which, during his campaign for the US presidency, he promised to turn into a global “pariah”.