(New York) Oil prices tempered their sharp rise on Tuesday in the wake of the announcement of American sanctions against Russia, after a momentary conflagration which brought Brent close to the symbolic bar of 100 dollars.
Updated yesterday at 3:53 p.m.
The price of a barrel of Brent from the North Sea for April delivery ended up 1.52% at 96.84 dollars, while it had reached 99.50 dollars a barrel in the morning.
In New York, a barrel of West Texas Intermediate (WTI) for March delivery closed up 1.40% at $92.35 after climbing 4.86% to $95.50.
The two black gold benchmarks have thus reached new session records for 7 years, but the curve has calmed down after the announcement of American sanctions by President Joe Biden.
As Russian President Vladimir Putin defied the West, ordering his troops to enter separatist territories in eastern Ukraine, the White House announced sanctions against banks and “Russian elites” .
“These sanctions are not strong enough to stop Russian crude exports, so we have minimal upward price reaction,” explained James Williams of WTRG Economics.
He points out that the price of black gold would have reacted much more strongly to the rise if the sanctions had, for example, excluded Russia from the international Swift payment system, prohibiting it from transactions to export its oil.
The world’s second largest exporter of oil and the world’s largest exporter of natural gas, Russia “exports 5 million barrels of crude oil per day, of which a third to China and half to Europe”, recalled the analyst.
Germany, for its part, ended up giving in on Tuesday by suspending the Nord Stream II gas pipeline following Moscow’s recognition of pro-Russian Ukrainian provinces.
“It’s not going to change things anytime soon. Nord Stream II was not expected to work right away,” commented James Williams.
The gas pipeline, whose construction has been completed since last autumn, was not in service anyway due to a legal blockage.
“It’s not going to affect natural gas prices this winter, unless they shut down Nord Stream I,” the analyst added.
“Not only are geopolitical tensions supporting the uptrend, but the fundamentals of strong post-pandemic demand coupled with constrained supply from OPEC continue to support higher prices, added Victoria Scholar, analyst for Interactive Investor.
“This is the worst escalation since the Cold War,” said Ipek Ozkardeskaya, analyst at Swissquote.
“The most significant impact will probably be felt on commodity prices,” said Neil Shearing, analyst for Capital economics.
A tonne of aluminum reached $3,380 on Tuesday in the London base metals market (London Metal Exchange, LME), a few cents from its historic high reached in 2008.
Wheat, of which Ukraine and Russia are major producers, jumped 6% in one day.