Brent oil, a benchmark in Europe, surpassed $120 per barrel on Wednesday, driven by the war in Ukraine and the prospect of new Western sanctions against Russia.
Around 14 hours GMT, North Sea Brent rose 4.6% to $120.73 a barrel, and US Texas Light Crude (WTI) gained 4.5% in New York to $114.21.
Oil prices rose in volatile operations on Wednesday, supported by the interruption of Russian and Kazakh crude exports through the CPC pipeline.
The market remains nervous about the prospect of further sanctions against Russia, the world's second largest oil exporter, following its invasion of Ukraine in actions that Moscow calls a “special operation”.
US President Joe Biden will announce further sanctions on Russia when he meets with European leaders this Thursday in Brussels, including an emergency NATO meeting.
EU member countries remain divided over whether to ban imports of Russian crude oil and oil products that are still flowing, but this could change once short-term contracts run out, Reuters said.
Russia warned Tuesday of a drop in oil exports through the Caspian Pipeline Consortium (CPC) of up to 1 million barrels per day (bpd), or 1% of world production, due to storm damage.
Exports by CPC stopped completely on Wednesday and repairs will take at least a month and a half, according to a port shipping agent.
According to the Russian media Kommersant, the Russian Ministry of Energy, in the context of Western sanctions and rising oil prices, reported an unexpected and critical failure of the oil export equipment of the Caspian Pipeline Consortium of Novorossiysk.
“Damage to two of the three remote mooring units due to a storm could reduce supplies to the world market by one million barrels per day at a time. Repairs, according to various estimates, can take anywhere from three weeks to two months, during which time suppliers and consumers will have to look for alternative routes of supply. According to experts, the countries of southern Europe, as well as the United States, may suffer the most from the termination of shipments,” Kommersant published.
The drop in oil inventories in the United States, the world's largest oil consumer, also increased supply apprehension.
The latest data from the American Petroleum Institute industry group showed that stocks fell by 4.3 million barrels during the week ending March 18, according to market sources.
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