NEW DELHI : Crude oil prices soared on Thursday as fears of a supply crunch intensified after the International Energy Agency (IEA) raised concerns over supply because of non-availability Russian oil.
Russia’s invasion of Ukraine and the Western sanctions on its oil exports could mean 3 million barrels a day of Russian supply being effectively cut off from global markets starting next month, IEA said in its oil market report for March 2022.
At the time of writing the story, the May contract of Brent futures on the Intercontinental Exchange was $104.05, higher by 6.15% from its previous close. The April contract of West Texas Intermediate was $100.77 per barrel, higher by 6.03% from its previous close.
“The prospect of large-scale disruptions to Russian oil production is threatening to create a global oil supply shock. We estimate that from April, 3 million barrels per day (mbpd) of Russian oil output could be shut in as sanctions take hold and buyers shun exports. Opec (Organization of the Petroleum Exporting Countries (Opec))+ is, for now, sticking to its agreement to increase supply by modest monthly amounts," IEA said in its report.
Only Saudi Arabia and the UAE hold substantial spare capacity that could immediately help offset a Russian shortfall, it said.
Earlier this month, the agency also announced that its member countries will release 61.7 million barrels of oil under its emergency response plan to alleviate the increasing tightness in oil markets.
High oil prices are a cause of concern for India as the country imports 85% of its oil demand.
The recent surge in global crude also pushed up the price of Indian energy basket, comprising of Oman, Dubai and Brent crude. It was last recorded at $103.50 per barrel on 16 March, according to data from the petroleum planning and analysis cell of the ministry of petroleum and natural gas.
The increase in the price of crude oil has not been transferred to consumers of petrol and diesel. However, oil marketing companies raised jet fuel prices by a steep 18% on Wednesday. In a first, aviation turbine fuel prices are now above the ₹1 lakh per kilolitre mark.
