US hints at sanctions on Russian oil

A senior US official yesterday dangled the prospect of a worldwide ban on Russian oil imports, in what would be a major ratcheting up of already strict sanctions on the country’s economy.

Russian banks have been effectively barred from the global financial system in retaliation for the country’s increasingly brutal invasion of Ukraine.

But US Secretary of State Anthony Blinken said he was in “very active discussions with our European prtners about banning the import of Russian oil to our countries.”

Such a move would likely trigger a further increase in spiking global oil and energy prices, but would also cut off a vital funding stream to the Russian economy.

Over the weekend Shell was forced to defend a purchase of Russian oil, arguing they had “no alternative” in order to avoid a disruption to market supply.

Ukraine’s foreign minister Dmytro Kubela tweeted: “one question to Shell: doesn’t Russian oil smell [of] Ukrainian blood for you?”.

Analysts at investment bank Stifel warned last week that oil could hit $200 per barrel if Russia was cut off from the global oil market.

Ole Hansen, head of commodities at Saxo Bank, said although Europe may be able to survive a Russian supply shock as the weather improves, questions would be asked about the speed with which Europe’s energy mix could be withdrawn before next winter.

Energy fears will add to concerns for equities traders this week.

London’s premier FTSE 100 index had a torrid time last week, losing nearly seven per cent of its value.

Friday was the index’s worst day since March 2020.

Traders were spooked by the potential economic fallout of Moscow stepping up its assault on Kyiv, leading them to dump risky assets and pour into safe havens such as government bonds and gold.