Oil prices retreated after having hit more than $130 per barrel on Sunday evening as markets panicked over a possible embargo of Russian crude oil.
The United States and its European allies are discussing a ban on Russian oil imports in the latest attempt to punish Moscow for its incursion in Ukraine.
Europe is heavily dependent on Russian gas and a bit less dependent on its crude, but, according to unnamed sources close to the talks, European governments have become more willing to sanction crude exports, Reuters reported earlier today.
"We are now in very active discussions with our European partners about banning the import of Russian oil to our countries, while of course, at the same time, maintaining a steady global supply of oil," U.S. Secretary of State Anthony Blinken told NBC.
"The goal is to isolate Russia and to make it impossible for Putin to finance his wars," European Commission President Ursula von der Leyen told CNN on Sunday. "For us, there is a strong strategy now to say we have to get rid of the dependency of fossil fuels from Russia."
At the same time, U.S. Congress is working on its own set of sanctions targeting Russian oil, even though the United States imports roughly 200,000 bpd of Russian crude and about half a million in refined products that may be difficult to replace because of sanctions against Venezuela and Iran.
Analysts, meanwhile, are warning that a ban on Russian oil would push prices even higher.
"A boycott would put enormous pressure on oil and gas supply that has already felt the impact of increasing demand," analysts from CMC Markets said.
"Prices are likely to rise in the short term, with a move toward $150 a barrel not out of the question," the analysts also said, "Such a move will put further pressure on global economies, pushing inflation higher, leaving central banks debating how quickly rate hikes should be implemented."
By Irina Slav for Oilprice.com
More Top Reads From Oilprice.com:
- Oil Prices Break $130 As EU And U.S. Allies Consider Ban On Russian Crude
- Can The World Economy Function Without Russian Oil?
- $110 Oil Prompts Private Shale Firms To Open The Taps