HOUSTON — Before its forces invaded Ukraine, Russia provided one out of every 10 barrels of oil the world consumed. But as the United States and other customers shun Russian crude, the global oil market faces its greatest upheaval since the Middle East tumult of the 1970s.
An energy price shock will probably last as long as the confrontation goes on, since there are few alternatives to quickly replace Russia’s exports of roughly five million barrels a day.
Oil prices were already rising fast as the world economy emerged from Covid-19 shutdowns and producers stretched to meet growing demand. International oil companies had cut back investment over the last two years.
Now traders are bidding up crude prices to levels not seen in years, expecting that Russia — one of the top three oil producers, along with the United States and Saudi Arabia — will be sidelined. With the announcement of the American embargo on Tuesday, prices will probably climb higher, energy analysts say.
“We are catastrophically tightening,” said Robert McNally, a former energy adviser to President George W. Bush. “What we need right now is countries producing more oil.”
That will not be easy. Only Saudi Arabia, the United Arab Emirates and Kuwait have spare capacity, together a little more than 2.5 million barrels a day. Venezuela and Iran could contribute about 1.5 million barrels a day to the market, but that would require lifting American sanctions against those countries. And the United…
