Oil extends rally after US bans Russian imports, prompting supply fears

Oil prices firmed on Wednesday over fears of a potential supply shock as the United States banned Russian oil imports, and amid signs that some buyers are already shunning them.

Brent crude futures were up $2.91, or 2.27%, at $130.89 a barrel at 0520 GMT, after jumping 3.9% the previous day, Reuters reported.

U.S. West Texas Intermediate (WTI) crude futures were up $2.34, or 1.89%, at $126.04 a barrel, after also surging 3.6% on Tuesday.

U.S. President Joe Biden on Tuesday imposed an immediate ban on Russian oil and other energy imports and Britain said it would phase out Russian oil imports through the end of 2022 in response to Russia’s invasion of Ukraine.

Shell said on Tuesday it would stop buying Russian crude and phase out its involvement in all Russian hydrocarbons, becoming one of the first major Western oil companies to abandon Russia entirely.

Meanwhile, Goldman Sachs estimated that more than half of Russian oil exported from ports remained unsold, while JP Morgan estimated around 70% of Russian seaborne oil was struggling to find buyers.

Oil prices have surged more than 30% since Russia, the world’s second-largest crude exporter, launched what it called a “special operation” in Ukraine. Fears of further disruptions to oil supply amid escalating sanctions on Moscow has boosted buying, analysts said.