Chronicle Editor
Oil extended gains as U.S. and other major economies agreed on a coordinated release of oil stockpiles after Russia’s invasion of Ukraine, according to people familiar with the matter.
Futures in New York climbed as much as 8%, trading above $103. Brent futures surged to above $105 a barrel.
The International Energy Agency, which represents key industrialised consumers including Japan and Germany, agreed to deploy 60 million barrels from stockpiles around the world.
Meanwhile, the European Union is discussing the exclusion of seven Russian banks from the SWIFT messaging system, including VTB Bank PJSC, in the latest list of financial penalties against Russia.
“You are looking at losing 5 million barrels of Russian exports,” said Bob Yawger, director of the futures division at Mizuho Securities USA. The coordinated strategic reserves “doesn’t compete with that. The market can’t afford to lose Russia’s barrels.”
Wall Street banks including Goldman Sachs Group Inc., Morgan Stanley and JPMorgan Chase & Co. have boosted their oil price forecasts, anticipating possible supply disruptions. Consultant OilX said the probability of heavy disruption of seaborne Russian crude and products is growing, which could push prices above $150 a barrel.
A 60 million barrel release from strategic oil reserves would be equivalent to less than six days of Russian output, and traders are weighing the potential impact. This release will mark the second from American crude reserves within a few months as soaring fuel costs become a growing political problem for U.S. President Joe Biden.
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