Oil prices have surged more than 7% to their highest level since 2014 as a global agreement to release crude reserves failed to calm fears of supply constraints.
Members of the International Energy Agency (IEA), which includes the U.S. and Japan, agreed to release 60 million barrels of crude from their reserves to try to quell the sharp increase in prices that pushed major benchmarks past $100 U.S. a barrel.
However, news of that release, which is equivalent to less than one day of global oil consumption, only magnified the market’s fear that supply will be inadequate to cover growing disruptions caused by Russia’s invasion of Ukraine and the international communities response.
Brent crude oil futures rose to just under $110.00 U.S. a barrel, its highest level since August 2014. At the same time, U.S. West Texas Intermediate (WTI) crude oil rose 8% to $103.41 U.S. per barrel, its highest close since July 2014 and its biggest daily percentage gain since November 2020.
Furthering the rally in crude oil prices was news from the American Petroleum Institute that U.S. crude stocks fell by more than six million barrels in the most recent week. U.S. heating oil and gasoline futures hit their highest levels since 2014 following that disclosure.
U.S.-led sanctions on Russia exempted the energy sector, but traders are shying away from trading Russian barrels, leading to big discounts on that oil and tightening supply for other kinds of crude.
Major oil and gas companies, including BP (BP) and Shell (SHEL), have announced plans to exit Russian operations and joint ventures.
The world’s biggest shipping firm, AP Moeller-Maersk A/S (MAERSK-B), was halting container movement to and from Russia, while Britain has banned ships with any Russian connection from entering its ports.
The largest supplier of global oil, the Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, known as OPEC+, have not signaled a desire to boost production beyond their expected 400,