U.S. oil prices soar Sunday, briefly punching above $130 as talk of Russia oil embargo heats up

Price action

• U.S. oil in electronic trade CL00, +7.95% was up $10.76, or around 9.3%, at $126.34 a barrel Sunday evening after April West Texas Intermediate crude futures CLJ22, +7.95% CL.1, +7.95% on the New York Mercantile Exchange marked its highest weekly gain on record, up 26.3%, based on data going back to 1983. At its peak on Sunday, oil hit an intrasession high of $130.50 before pulling back, according to FactSet.
• International benchmark Brent crude BRN00, +8.83% adding $10.67, or 9.1%, at $128.83 a barrel, following a 25.5% weekly rise for May Brent BRNK22, +8.83%, also marking the strongest such percentage advance over a week on record, based on records going back to January 1991. Brent touched a Sunday peak of $139.13.

Market drivers

Speaking on CNN’s “State of the Union,” Blinken said the White House is reviewing the prospect of banning Russian oil imports, in coordination with European allies, while attempting to mitigate the impact of any such ban on global supplies, which could drive already-lofty prices further higher.

Also read: U.S. stock futures sink Sunday as U.S. and its allies consider ban on Russian oil imports

“We’ve seen the ruble in free fall. We see the economy heading into a deep recession. We’ve already had a major impact, but we are looking, again, as we speak, in coordination with allies and partners at this prospect of banning oil imports,” he told NBC News.

Russia is one of the biggest producers of crude oil, and sanctions its oil are viewed as holding the possibility of rippling through markets.

That said, there has already been an implicit ban of Russian crude, with prospective buyers shunning crude out of Russia.

Helima Croft, head of global commodity strategy at RBC Capital Markets, in a Thursday report, noted that Russian oil is facing an de facto embargo as the U.S. and its allies have imposed tough sanctions on major Russian banks, blocking them from the crucial SWIFT interbank messaging service for Moscow’s invasion of Ukraine on Feb. 24. The sanctions avoided crude sanctions amid rising inflation being faced by the U.S. and much of the world but momentum around enacting an energy ban is building, as Western nations aim to curb the Kremlin’s military campaign in Ukraine and cripple it financially.

Croft said that Russia’s “already staggering” export losses could hit 3 million to 4 million barrels a day if Western powers follow through and impose the sort of energy-focused “secondary sanctions” that were aimed at Iran.

Meanwhile, Bloomberg reported on Sunday that Saudi Arabia raised prices for all regions, hiking its Arab Light crude for next month’s shipments to Asia to $4.95 a barrel above the benchmark it uses.

Doubts about achieving a nuclear disarmament agreement between Iran and world powers also was helping to push prices of crude higher, Reuters reported, with doubts mounting that such a deal, which could see Tehran pour fresh supply onto the market, could be reached soon.