Oil soars to $110 as European energy groups shun Russian crude

Oil soars to $110 as European energy groups shun Russian crude

Big energy consumers are boycotting Russian crude following Moscow’s invasion of Ukraine in moves that helped to push oil prices above $110 a barrel on Wednesday.

Demand for Russian oil has collapsed as refineries, banks and shipowners shunned the country’s vast commodities market. Energy Aspects, a consultancy, said 70 per cent of Russian crude was “struggling to find buyers”.

Energy markets have largely been spared from sanctions deployed by the US, EU and UK on Russia’s financial sector, but typical buyers are effectively self-sanctioning, setting off a race to secure alternative supplies in an already tight market.

“Most European majors are not touching Russian oil, and only a few European refiners and trading firms are still in the market, but spiking freight rates and war insurance premiums are significantly complicating transactions,” Energy Aspects said. “Several shipowners have reportedly been unwilling to make bookings from the Baltic or Black Sea due to the lack of war insurance.”

Brent crude, the international oil marker, rose 6 per cent to an eight-year high above $111 a barrel on Wednesday, extending gains this week to almost 10 per cent.

In a sign that pressure in commodities is not limited to oil, European natural gas prices surged 50 per cent