Following the US pressure on its allies on Tuesday to ban Russian oil imports as punishment for Moscow’s invasion of Ukraine, fears of energy war between Russia and the West emerged.
As he pushed for their support to ban Russian oil imports, US President Joe Biden held a video conference call on Monday with the leaders of France, Germany, and Britain.
Bank of America’s analysts have previously warned that if most of Russia’s oil exports were cut off, it would create a shortfall of 5 million BPD or more, and push the oil prices as high as $200.
After trading as high as $125.19., Brent crude futures went up to $1.06, or 0.9% at $124.27 a barrel on Tuesday. The possibility that the US might ban Russian oil imports has triggered on Monday a surge in Brent crude to almost its highest level since 2008 -$140 a barrel.
Also on Monday, European Commission’s climate policy chief Frans Timmermans said that the European Union could start curbing its reliance on Russian gas within months and wean itself off it within years. Timmermans said that their plans to substantially reduce their dependency on Russian gas already this year is not easy, but it’s feasible.
The Dutch gas, which is a price-setter in Europe, jumped on Monday as high as 64% to €335 a megawatt-hour, the equivalent of around $600 a barrel of oil.
Reacting to Berlin’s decision last month to halt the opening of the Nord Stream 2 pipeline, Russia, which supplies 40% of Europe’s gas, warned it could stop the gas flow to Germany.
Stressing that Moscow has every right to take a matching decision and impose an embargo on gas pumping through the Nord Stream 1, Russian Deputy PM Alexander Novak also warned that oil prices could skyrocket to $300 a barrel if the US and its allies ban Russian oil imports.
Oil export is a crucial revenue source for Russia after the country was effectively frozen out of Western financial markets, but that can also hit a wide range of world industries and add to global food security fears since Russia is also the world’s largest grains and fertilizers exporter and a top producer of palladium, nickel, coal, and steel.
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