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Russia’s invasion of Ukraine has injected a lot of uncertainty into the oil market. Brent and West Texas Intermediate (WTI) crude prices sailed past the $100 mark on March 1, hitting highs not seen in nearly eight years. By midday Eastern Standard Time, Brent futures were up 9 percent to $106.77 and WTI was up 10.3 percent to $105.61, according to Reuters.
A sharp increase came with the news that members International Energy Agency (IEA) opens oil reserves to help settle the market. 60 million barrels were released, although as Reuters shows, it equals less than one day of global consumption. Currently, the Organization of the Petroleum Exporting Countries (OPEC) and non-OPEC countries (known collectively as OPEC+) are showing no signs of increasing production. The group’s monthly meeting is scheduled for March 2.
So far, sanctions against Russia have not specifically targeted oil exports. However, that could be a moot point as companies like BP and Shell cut ties to Russian operations. Oil delivery is also getting more difficult – The UK has closed its shipping ports to ships with Russian connections – and financial sanctions created problems with payments.
What does this mean for fuel prices? In the United States, the latest information is available from US Energy Information Administration shows the median price for regular grade gasoline was $3.60 as of Feb. 28. That’s an increase of nearly 8 cents from the previous week and nearly $1.00 more than this time last year. Quick search via Gas Friends shows gasoline prices in most major cities falling around this average, except for California where regular gas is already above $4.00 a gallon.
Diesel fuel prices are also above $4.00 per gallon, but that’s the average across the US. The threshold was crossed on February 14th when the price reached $4.01, and costs continued to rise. On February 28, on-highway diesel was $4.10 a gallon, up 5 cents from the previous week. Compared to February 2021, this is an increase of more than $1.00. Like gasoline, the highest prices are found in California with diesel exceeding $5.00 a gallon in some areas.
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