At one point Wednesday the U.S. benchmark was up more than $3 a barrel, before retreating by more than $4. Equity markets were rallying, while crude and gas slumped, reversing some of the main trades seen since war broke out.
The U.K. said it would also phase out Russian crude imports by the end of the year, and Shell Plc and BP Plc are halting new purchases, but other European nations have been reluctant to commit to similar action. The International Energy Agency said a recently announced stockpile release will amount to almost 63 million barrels of crude and products, but it has done little to cool prices.
There were huge price fluctuations in fuel markets too. In Europe, traders were paying unprecedented premiums to secure near-term diesel supply, as futures surge past the equivalent of $200 a barrel. Those moves also cooled by mid-morning European time.
Russia is a key member of the OPEC+ alliance and a major producer of crude and petroleum products such as diesel. Mounting sanctions on the nation are prompting supply fears, with fuel prices following oil higher. American gasoline prices rallied to a record Monday, increasing the pain for consumers.
Oil imports from Russia made up about 3% of all the crude shipments that arrived in the U.S. last year. When other petroleum products are included, such as unfinished fuel oil, Russia accounted for about 8% of oil imports. A planned House vote on the legislation to ban imports was delayed, even as Biden moved ahead with executive action amid growing political pressure to do so.
“Extreme volatility continues in most commodity markets,” said Keshav Lohiya, founder of consultant Oilytics. “The market is awaiting for the domino effect of mainland Europe announcing a ban, however, with oil majors announcing that they won’t touch Russian oil, there is already a de-facto ban.”
Shell and BP said they won’t make any new purchases of Russian oil and gas, but won’t be able to immediately to disentangle themselves from the country in part due to long-term contracts. It’s a dramatic U-turn for Shell, which faced heavy criticism for its purchase of Russian crude last week.
Separately, the American Petroleum Institute reported U.S. crude inventories rose by 2.81 million barrels last week, while stockpiles at Cushing dropped, according to people familiar with the data. Energy Information Administration figures are due later Wednesday.