Brent Future Hits USD 130.70 Per Barrel After US Ban Russian Oil

Crude oil prices have hiked to their highest levels since 2008 after the U.S. announced it would ban imports of Russian oil.

As of Wednesday, 9^th March 2022, the Brent Futures on the International Exchange was at 130.70 per barrel. The West Texas Intermediate on the NYMEX rose 1.69 percent to 14,352.64 shillings a barrel.

Since news of the ban broke on Tuesday, Brent crude rose around 7 percent, West Texas Intermediate crude rose as high as 21,610.54 shillings a barrel, while international benchmark Brent crude rose as high as 22,306.55 shillings a barrel.

This week has seen one of the fastest rises in prices on record, with crude climbing over 30 percent since Russia invaded Ukraine. On Monday, the prices touched a multi-year high of 15,874.73 shillings per barrel. Prices will remain high and volatile for a few months, according to one Fargo analyst.

Oil prices have climbed more than 60 percent so far this year. Biden’s executive order bans the importation of Russian crude oil and certain petroleum products, liquefied natural gas, and coal.

It also bans new U.S. investments in Russia’s energy sector, and prohibits Americans from financing or enabling foreign companies that are investing in the Russian energy sector.

Some analysts believe the current spike in oil prices could derail efforts to transition toward clean energy in the short-to-medium term as officials look to secure supply chain resilience, but speed it up in the long run.

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The rising oil prices are a cause for concern globally, especially for countries that largely depend on Russia, which is the third-largest producer of petroleum after the U.S. and Saudi Arabia.

Russia exported almost 5 million barrels a day of crude oil in 2020, according to the U.S. Energy Information Administration. Almost half of those exports went to European countries, while 42 percent went to Asia and Oceania.

Much of the burden of increase in oil prices is likely to be shifted to the consumers across the globe who are looking into a possible sharp increase in the retail fuel prices.

In Kenya for instance, the gasoline price is 131.630 shillings per liter and 498.274 shillings per gallon. Diesel prices are 110.6 shillings per liter and 103.54 shillings per liter for kerosene in Nairobi City.

Despite the increase in the landing costs of petroleum and diesel, the Kenyan government maintained fuel prices for the fourth month in a row. This was enabled by the utilization of the Petroleum levy.

Natural gas prices have also increased by 5.39 percent with spot gold, which is typically considered a safe-haven asset, rising 1.82 percent and it last traded at 1,942.21 dollars.

Kenyans, who are currently choked by the increased food prices, should prepare for soaring fuel prices and a further rise to the food bills amid the crisis in eastern Europe. The effect will spill off and hike transport prices, energy bills, and the cost of manufactured goods.