Oil prices surge as fears about Russian crude supplies intensify

Oil prices continue to surge on Wednesday, with markets bracing for serious disruptions to crude supplies from Russia as Moscow's invasion of Ukraine grinds on.

The global benchmark, Brent, soared to as high as $113 a barrel on Wednesday, just days after breaching the triple-digit mark for the first time in seven years.

Although the U.S. and its allies intentionally avoided targeting Russia's energy supplies, they have hit the country with unprecedented financial sanctions. Those actions have made oil purchasers, like refineries, wary of the risks posed by future sanctions if they enter new contracts now.

And prices for things like tankers are soaring as more companies refuse to do business with Russia.

"The market panic is here," Louise Dickson, senior oil market analyst for Rystad Energy, wrote on Wednesday. "Today's market situation is extreme by any measure."

An effort to calm markets backfires

The surge in crude prices comes even as countries have taken steps to stabilize energy markets and bring down prices.

On Tuesday, 31 countries, including the United States, announced they would release a total of 60 million barrels of crude oil from their strategic petroleum reserves.

It didn't work. In the hours after the announcement, prices continued to climb.

Markets may have been underwhelmed by the size — 60 million barrels is smaller than a similar release the U.S. organized last fall (which also did not bring prices down), and it reflects just about 12 days' worth of Russian exports.

And the announcement itself may have stoked panic, Dickson, with Rystad Energy, argues.

"It was a signal from the group, which has historically only released stocks during the Gulf War, Hurricane Katrina, and [the Libyan] civil war, that what lies ahead is higher oil prices," she says.

Biden spotlighted the release of emergency reserves in his State of the Union address on Tuesday night, saying it would "blunt gas prices," but that seems unlikely.

OPEC+ declines to act

On Wednesday, the powerful oil cartel OPEC+ gathered for a meeting to discuss the state of the world oil markets, and whether they should stick to plans to gradually boost output or change to respond to a changing world.

The meeting lasted just 13 minutes. The result: No change in plans.

The group argued that recent price volatility was driven by "current geopolitical developments," rather than underlying fundamentals like supply and demand.

And the group says it responds to those fundamentals, rather than world events.

That was no surprise to analysts. Russia is a key member of the OPEC+ alliance, and other members — including Saudi Arabia — are enjoying the bumper revenues they get from high oil prices.

"For Russia and the other OPEC+ members, maintaining cooperation is in their best interest," says Stacey Morris, research director at the index provider Alerian.

Natural gas, gasoline prices are also rising

European natural gas prices have also soared, briefly hitting a new all-time high on Wednesday.

The fuel — which is used for electricity, heating and home appliances like stoves — is critical to the European economy, and Russia is a major supplier.

Natural gas is still flowing through pipelines but there are mounting concerns that either pipelines could be interrupted, or shipments of liquefied natural gas by sea could be reduced.

In the United States, gasoline prices are climbing. Gasoline is produced by refining crude oil, and crude prices make up most of the price at the pump.

The national average for a gallon of gasoline is now $3.65, according to AAA, up 26 cents from a month ago.

Patrick de Haan, head of petroleum analysis at GasBuddy, predicts that the average price will top $4 before the end of March.

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