Energy Economy

Ukraine Update: Oil Price Spikes, Russian Tactics, Highest Pump Prices in 14 Years

The price of West Texas Intermediate (WTI) crude oil soared to more than $123 a barrel early Monday as traders scrambled to avoid being left out in the event that the United States and other nations ban imports of Russian oil. The price of Brent crude, the international benchmark, rose to $125 a barrel.

The average price of a gallon of regular gasoline jumped by nearly six cents on Sunday and rang in early Monday at $4.07 per gallon, according to GasBuddy. The highest average price since 2008 is $4.10 a gallon.

U.S. officials reportedly are holding discussions with representatives of the Venezuelan government in an effort to find an alternative supply of crude if the sanctions on Russia are tightened to include a ban on imports of Russian crude. According to the Financial Times, U.S. Secretary of State Antony Blinken said Saturday that the U.S. was holding “very active discussions” with its partners “to ban imports of Russian oil in a coordinated manner.”

Last week, dockworkers at the U.K.’s main liquefied natural gas (LNG) import hub on the Isle of Grain refused to unload an LNG carrier and the ship was diverted, according to a report in the Guardian. The BBC has reported that a second LNG carrier was also diverted.

Between February 24 and March 6, 1.7 million Ukrainian citizens have fled the country, according to the U.N.’s refugee agency. More than a million have arrived in Poland. The BBC reported early Monday morning that the so-called humanitarian corridor leading out of the Mariupol had been mined by Russian forces.

Ukrainian troops in the city of Mykolaiv, a port city on the Black Sea coast, have beaten back Russian troops trying to enter the city for three days. According to the New York Times, Russia’s failure to take Mykolaiv and other cities “is largely a function of its military’s faltering performance. Russian forces have suffered from logistical snafus, baffling tactical decisions and low morale.”

Writing in Defense News, Patrick Tucker notes that Ukraine is winning the fight for hearts and minds, in part because the Russians were prevented from repeating their public relations strategy of 2014. He cites Nika Aleksejeva, a lead researcher for the Baltics at the Atlantic Council’s Digital Forensic Research Lab:

That failure is largely due to U.S. efforts to highlight Russian false-flag operations before they occurred and rally a strong, unified response. But the Russians did themselves no favors in how clumsily they attempted to persuade audiences that Ukrainian forces were committing atrocities in the Russian-occupied portion of the Donbas.

The issue is soon likely to become how long American and European citizens are willing to endure high fuel prices and the other collateral costs of the sanctions against Russia. Stock futures were down about 1% in Monday’s premarket trading. Were it not for oil company stocks rising sharply, the downside would be much worse.

Occidental Petroleum was up more than 12% at $62.90, while Coterra Energy was up 7.5% and Devon up 5.3%. PNC Financial was the premarket’s big loser, down 6.8%. Among the 229 S&P 500 stocks being traded in Monday’s premarket, 48 were up and 181 down. Among the winners is just about any oil producer you choose to name, along with most defense contractors.

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