Oil Prices Surge as Western Sanctions Spook Purchases of Russia Crude

Crude prices surged over $115 a barrel for the first time since 2008 as refiners refused to buy Russian oil, removing some of the global energy supply from the market.

The cost of oil is emerging as collateral damage from Western sanctions on Russia for its invasion of Ukraine. The energy sector isn’t in the crosshairs of those sanctions, but they have spooked refiners, according to traders, oil executives and bankers.

Brent-crude futures, the international benchmark, rose 3.5% to $116.93 a barrel. Investors are worried that a prolonged elevation in oil prices could precede slowing growth and higher inflation, known as stagflation.

“The inflationary impact of oil and natural gas surges is clear. Inflation is going to be stickier. Interests rates will be pushed up by central banks worried about inflation and that will be bad for growth,” said Edward Park, chief investment officer at U.K. investment firm Brooks Macdonald. “Stagflation is the big concern for 2023.”

European natural-gas prices added 16%, compounding on a surge this week. Analysts and investors have worried that supply of natural gas could be disrupted to Europe as a result of the war. About a third of Russian gas exports to Europe flow through Ukraine, according to analysts.