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Oil price soars: Misery for motorists as cost for crude soars 5 percent to £88

NewsOil price soars: Misery for motorists as cost for crude soars 5 percent to £88

Industry flagship Brent crude rose by $5.05 (£4), or 4.9 percent to sell at $107.51 (£88) a barrel while US West Texas Intermediate crude climbed $5.95 (£4.87) a barrel to sell at $105.71 (£86.59) a barrel, a 6 percent increase. Prices have soared mainly because of concern amongst investors over supply from Russia following the invasion of Ukraine at the end of February, causing many nations to implement crippling sanctions on Russian companies.

Oil gas prices have generally risen since Russia’s invasion of Ukraine in February after the United States and its allies imposed heavy sanctions on Russia.

Oil rose at one point to $140 (£114.72) a barrel as investors became concerned about supply from Russia stopping completely.

Russian gas flows have also fallen by a quarter after Ukraine halted a major transit route through its territory blaming Russian interference.

It was the first time that supplies through Ukraine itself have been disrupted and will raise fears of further issues around supply as well as price rises.

Russia is also starting to retaliate by imposing its own sanctions.

On Wednesday, Moscow imposed sanctions on 31 companies based in countries that imposed sanctions on Russia when it invaded Ukraine in February.

The European Union has threatened to impose a full oil embargo on Russia despite the fact that several member states such as Germany, Hungary and Italy are heavily dependent on Russian supplies.

As Russia is the biggest exporter of crude and fuel such measures could cause even more disruption including further rises in the price of oil 

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An EU oil embargo would need unanimous support from all member states.

However, currently Hungary led by the pro-Putin Viktor Orban is opposing an embargo.

Andrew Lipow, president of Lipow Oil Associates in Houston said: “Prices are going to continue to move on up especially if the European Union comes to an agreement to phase out Russian oil purchases over the balance of this year.”

Although US oil stocks have grown by 8 million barrels due to the release of reserve stocks by the Biden administration, gasoline stocks were down by 3.6 million. 

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Therefore, despite having significant spare capacity compared to European nations, the US has begun to rely heavily on imports to meet demand from overseas.

The US is currently exporting 4 million barrels of oil daily as it is seen as an alternative source of supply to the heavily sanctioned Russian market.

Therefore to increase exports supply has dwindled somewhat keeping prices high.

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