By Reuters, published by US News & World Report, plus Matichon
WITH oil prices jumping to $139 a barrel today (Mar. 7) amid market supply fears as the United States and European allies considered banning Russian oil imports and prospects for a swift return of Iranian crude to global markets receded, Prime Minister Prayut Chan-o-cha urged people to limit use of private cars.
The government is trying to ease the situation as best it could, he said, but it would be impossible to do so a hundred percent or please everyone.
“We can’t force anybody and can only ask everyone to save as much energy as possible, especially by using private cars sparily because the price of oil is rising everyday.
“We can handle this upto one level but if the price steadily climbs higher what do we do? Our budget is limited to the amount available and will other parts also be hit and other groups too? I hope everyone understands,” he said.
In the first few minutes of today’s trade Brent crude reached $139.13 a barrel and US West Texas Intermediate (WTI) hit $130.50, both benchmarks striking their highest since July 2008.
By 1204 GMT, prices had eased back, with Brent up 6.3% at $125.55 per and WTI up 6.7% at $123.37.
Global oil prices have spiked more than 60% since the start of 2022, along with other commodities, raising concerns about world economic growth and stagflation. China, the world’s No. 2 economy, is already targeting slower growth of 5.5% this year.
US Secretary of State Antony Blinken said on Sunday that the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with Congressional committees to move forward with a US ban.
“We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period,” UBS commodity analyst Giovanni Staunovo said.
A prolonged war could see Brent moving above the $150 per barrel mark, he said.
Analysts at Bank of America said if most of Russia’s oil exports were cut off, there could be a 5 million barrel per day (bpd) or larger shortfall, pushing prices as high as $200.
JP Morgan analysts said oil could soar to $185 this year, and analysts at Mitsubishi UFJ Financial Group Inc (MUFG) said oil may rise to $180 and cause a global recession.
Russia is the world’s top exporter of crude and oil products combined, with exports at around 7 million bpd, or 7% of global supply. Some volumes of Kazakhstan’s oil exports from Russian ports have also faced complications.
The head of Japan’s largest business lobby said the country’s imports of Russian crude could not be replaced immediately. Russia is Japan’s fifth-biggest supplier of crude oil and liquefied natural gas (LNG).
Meanwhile, talks to revive Iran’s 2015 nuclear deal with world powers were mired in uncertainty after Russia demanded a US guarantee that sanctions it faces over the Ukraine conflict would not hurt its trade with Tehran. China also raised new demands, sources said.
France told Russia today not to resort to blackmail over efforts to revive the nuclear deal, while Iran’s top security official said the outlook for the talks “remains unclear”.
“Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long,” said Amrita Sen, co-founder of Energy Aspects, a think tank.
Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said.
Separately, US and Venezuelan officials discussed the possibility of easing oil sanctions on Venezuela but made scant progress toward a deal in their first high-level bilateral talks in years, five sources familiar with the matter said, as Washington seeks to separate Russia from one of its key allies.
Top: Prime Minister Prayut Chan-o-cha, left, and a private car at a pump, right. Photo: Matichon
Home Page: Models of oil barrels and a pump jack are displayed in front of a rising stock graph and “$100” in this illustration taken on Feb.24, 2022. Photo: Reuters /Dado Ruvic and published by US News and World Report
(Reuters reporting by Bozorgmehr Sharafedin in London and and Scott DiSavino in New York, additional reporting by Florence Tan in Singapore; Editing by Jason Neely and Edmund Blair)