Oil Prices Are Now Up 60% Since Early December
Energy prices are surging again Tuesday as a resolution to the war in Ukraine that minimizes the damage to human lives and the global economy look less likely by the hour. Oil prices are now up 60% Since early December, and refined product prices have increased by more than $1/gallon in that time.
The playbook for international relations since the end of WWII is being rewritten this week, with countries on both sides of the war taking drastic measures that were unthinkable just a few months ago. In addition to the coordinated sanctions targeting the Russian economy, BP and Shell have walked away from their partnerships with Russian oil and gas majors Rosneft and Gazprom, leaving billions of dollars in investment behind along with many questions about how the global supply chain will replace Russian exports.
Fortunately for those in the US, supply challenges are still measured in allocations and not physical outages or forced curtailments in consumption. While the price volatility has suppliers changing prices much more rapidly than normal, and supply allocations tightened down across the country, actual outages are rare even though petroleum inventories are below normal levels across most of the country.
The Plantation pipeline was reported to come back online Sunday night, which gave suppliers across the South East a few minutes of relief that there would not be a major physical supply disruption adding to the chaos in financial markets.
The IEA is holding a meeting today to discuss a coordinated SPR release, which may provide a short term pullback in prices, but does little to alleviate long time fears as long as the world’s 2nd largest energy supplier is threatening everyone else.