LONDON: Oil rose towards $130 a barrel on Wednesday, supported by concern of a potential supply shock as the United States banned Russian oil imports and amid signs that some buyers are already steering clear.
The United States on Tuesday imposed a ban on Russian oil imports, Britain said it would phase them out and Shell said it would stop buying Russian crude.
JP Morgan estimated around 70% of Russian seaborne oil was struggling to find buyers.
“What is obvious is that the current crisis will not be resolved in the foreseeable (future) and consequently oil prices are expected to remain at elevated levels,” said Tamas Varga of oil broker PVM. Brent crude was up $1.68, or 1.3%, at $129.66 a barrel at 0905 GMT.
US West Texas Intermediate (WTI) was up $1.60, or 1.3%, to $125.30.
Oil has surged since Russia, the world’s second-largest crude exporter, launched what it called a “special operation” in Ukraine. Brent hit $139 on Monday, its highest since 2008.
One potential source of extra oil supply is Iran, which has been in talks with Western powers for months on restoring a deal which lifted sanctions on Iran in return for curbs on its nuclear programme.
But the talks have been complicated by a last-minute demand from Russia. Iran’s chief negotiator in the Vienna talks returned to the Austrian capital on Wednesday.
Amid the concern of supply shortages, there are signs the market is not short of oil yet.
US crude inventories rose by 2.8 million barrels, according to market sources citing figures from the American Petroleum Institute, an industry group, on Tuesday. Official US inventory figures are due at 1530 GMT.