The price of Brent crude oil, the widely-used global benchmark, spiked to more than $113 per barrel this week — its highest level in almost 7 years and a far cry from the (briefly) negative oil prices that we saw in April 2020.
The big oil players
Although the west has yet to target Russia's enormous energy sector specifically, investors are now clearly expecting some kind of disruption to Russia's significant production. In 2020 Russia produced more than 10 million barrels of oil per day, which is roughly 11% of global supply, only behind the US and Saudi Arabia.
Oil is oil... but now it's not
Interestingly, according to analysts at Commerzbank, Russia's Urals oil grade is now trading at an $18 per barrel discount to Brent crude oil as buyers skip Russian oil in favor of other exporters, for fear of future sanctions.
As president Biden mentioned in his State of the Union speech yesterday, surging inflation remains top of mind. Sanctions on Russian oil are likely to be popular, but toppling global oil markets could also contribute to higher energy costs at home.