A sign displays gas prices above $5 a gallon at a gas station in Los Angeles on March 4. Overall, gas prices have increased 45 cents a gallon in the last week, to a national average of $4. dollars.
Frederic J. Brown / AFP via Getty Images
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Frederic J. Brown / AFP via Getty Images
A sign displays gas prices above $5 a gallon at a gas station in Los Angeles on March 4. Overall, gas prices have increased 45 cents a gallon in the last week, to a national average of $4. dollars.
Frederic J. Brown / AFP via Getty Images
Oil prices rose to a 14-year high, while gasoline prices rose $4 a gallon to near a national record, as the United States and its allies discussed potential restrictions on oil purchases from Russia following when it invaded Ukraine.
Russian oil has so far been free from Western sanctions, at least directly, in an effort to mitigate economic downturns in the US and Europe.
But the outlook could change in the short term, sending Brent crude, the global benchmark, above $130 a barrel, its highest level since 2008. Brent is trading at around $124 a barrel. in the last trading session of the morning.
“We are currently talking with our European partners and allies to look together in a coordinated way about the prospect of banning Russian oil imports,” Foreign Minister Antony Blinken told CNN on Sunday. “It was a very active discussion when we talked.”
Energy prices spike as consumers in the US have to contend with The highest inflation in decades. Gasoline prices had surged prior to Russia’s invasion of Ukraine, as demand recovered from the pandemic’s plunge earlier and supplies were slow to catch up.
But the price increase has accelerated since Rusia invaded Ukraine late last month.
Gasoline prices rose 45 cents a gallon last week, to a national average of $4.06, according to AAA. This is about a nickel from the all-time high in 2008. (Adjusted for inflation, the 2008 record would equate to $5.37 today.)
Oil prices may rise further
How much higher energy prices could go depends on what sanctions are imposed and what additional supplies are available to replace any lost exports from Russia.
The US could simply refuse to buy oil from Russia, but if other countries continue to buy it will not have much impact on global supply and upward pressure on prices will be limited.
U.S. Secretary of State Antony Blinken speaks during a joint press conference with Latvia’s Foreign Minister at the Latvian National Museum of Art in Riga, Latvia, on March 7, 2022. Blinken said Sunday, the United States and European allies are negotiating potential restrictions on Russian oil exports.
Olivier Douliery / Pool / AFP via Getty Images
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Olivier Douliery / Pool / AFP via Getty Images
U.S. Secretary of State Antony Blinken speaks during a joint press conference with Latvia’s Foreign Minister at the Latvian National Museum of Art in Riga, Latvia, on March 7, 2022. Blinken said Sunday, the United States and European allies are negotiating potential restrictions on Russian oil exports.
Olivier Douliery / Pool / AFP via Getty Images
However, if the US and its allies act to limit Russian exports, global prices could move higher. Russia currently supplies about 7% of the world’s oil and other oil products, exporting about 7 million barrels per day.
If that supply is cut significantly, analysts predict that the price of crude could reach $180 or $200 a barrel. At the upper end of that range, gas prices are expected to average $5.84 per gallon.
Find other sources of oil
The Biden administration is eager to find alternatives to Russian oil. The administration has urged Saudi Arabia and other members of OPEC to increase production.
American officials have also opened talks with Venezuela about easing limits on its oil exports. If ongoing talks aimed at restoring the Iran nuclear deal succeed, that could also create an impetus for global oil supplies.
Rising prices could also boost domestic oil production. Federal forecasters expect US oil companies to produce 12 million bpd this year, up from 11.2 million bpd in 2021.
The war in Ukraine has also contributed to higher grain prices, as both Ukraine and Russia are major suppliers of corn and wheat. That can increase supermarket prices. The increase in grain prices is one special concern in the developing worldwhere people are heavily dependent on imported food supplies.
