Oil prices rose about 4% on Friday as US gasoline prices jumped to an all-time high and stock markets soared amid fears that supplies would tighten if the European Union bans Russian oil after Moscow sanctioned European units of state-owned Gazprom.

Brent futures rose $3.97, or 3.7%, to $111.42 a barrel by 1632 GMT, while US West Texas Intermediate (WTI) crude rose $4.38, or 4.1%, to $110.51.

US gasoline futures soared to an all-time high, boosting the gasoline crack spread – a measure of refining profit margins – to its highest since it hit a record in April 2020 when WTI settled in negative territory.

Automobile club AAA said US pump prices have risen to record highs of $4.43 per gallon for gasoline and $5.56 for diesel.

WTI was on track for its highest close since March 25 and its third weekly rise. Brent, however, remained set for its first weekly decline in three weeks.

Oil prices have been volatile, supported by worries an EU ban on Russian oil could tighten supplies but pressured by fears that a resurgent Covid-19 pandemic or other factors could cut global demand.

β€œAn EU embargo, if fully enacted, could take about 3 million bpd (barrels per day) of Russian oil offline, which will completely disrupt, and ultimately shift global trade flows, triggering market panic and extreme price volatility,” said Rystad Energy analyst Louise Dickson.

This week, Moscow slapped sanctions on the owner of the Polish part of the Yamal natural gas pipeline that carries Russian gas to Europe.

Published in The Express Tribune, May 14th, 2022.

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