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Business News/ Markets / Commodities/  Brent oil prices surge to $100 a barrel for first time in 8 years as Ukraine crisis escalates
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Brent oil prices surge to $100 a barrel for first time in 8 years as Ukraine crisis escalates

Escalation of the Ukraine crisis sparked fears of a disruption to the Russia's oil exports

Oil prices touched $100 a barrel (REUTERS)Premium
Oil prices touched $100 a barrel (REUTERS)

Brent oil surged to $100 a barrel for the first time since 2014 as Russia’s dramatic escalation of the Ukraine crisis sparked fears of a disruption to the region’s critical energy exports. Russia is the world's second-largest oil producer, which mainly sells crude to European refineries, and is the largest supplier of natural gas to Europe, providing about 35% of its supply.

Russian President Vladimir Putin today announced a "military operation" in Ukraine and called on soldiers there to lay down their arms, defying Western outrage and global appeals not to launch a war. Putin made a surprise statement on television to declare his intention.

“Sanctions forcing Russia to supply less crude or natural gas would have substantial implications on oil prices and the global economy. Russia accounts for one in every 10 barrels of oil consumed globally, so it is a major player when it comes to the price of oil and it's really going to hurt consumers at the petrol pumps," said Navneet Damani, Sr. Vice President - Commodity & Currency Research, Motilal Oswal Financial Services.

Despite a surge in international prices, Indian Oil Corp., Bharat Petroleum Corp. and Hindustan Petroleum Corp - which together control more than 90% of the domestic market - have frozen petrol and diesel rates for over three months. Analysts expect petrol and diesel prices to go up sharply in India after state elections end next month, adding pressure on the government and the central bank to take steps to contain inflation.

For India, “the rise in crude prices poses inflationary, fiscal, and external sector risks. Crude oil-related products have a direct share of over 9% in the WPI basket. The rise in crude oil prices is also expected to increase the subsidy on LPG and kerosene, pushing up the subsidy bill. India is Ukraine's largest export destination in the Asia-Pacific and the fifth largest overall. India's main exports to the European country are pharmaceutical products, reactors/boiler machinery, mechanical appliances, oil seeds, fruits, coffee, tea and spices among others. Pharmaceuticals account for the majority of Indian exports to Ukraine," he added. 

Analysts said one actor that could act as a temporary brake on prices is the Iran nuclear deal with rumours swirling around that a new agreement could be announced soon. The U.S. and Iran have been engaged in indirect nuclear talks in Vienna, in which a deal could lead to the removal of sanctions on Iranian oil sales and increase global supply. (With Agency Inputs)




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Updated: 24 Feb 2022, 09:14 AM IST
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