NEW YORK: Oil pushes higher as investors try to figure out whether a possible release of Strategic Petroleum Reserve (SPR) by the United States and its allies can do much to curb a dramatic surge in prices following Russia’s invasion of Ukraine.

       Futures in New York rose almost 2% in Asia after advancing 4.5% on Monday as sanctions on Russia rippled through the market.

       A release of 60 million barrels is being considered by the United States and others, according to people familiar, which would be equivalent to less than six days of Russian output. The International Energy Agency, meanwhile, held an extraordinary ministerial meeting yesterday.

       The American oil benchmark has whipsawed around US$100 (RM419.30) a barrel since the invasion last week as the market digested the impact of mounting financial penalties against Russia.

       Brent in London rallied above US$105 (RM440) at one point, with Goldman Sachs Group Inc saying demand destruction is the only thing that can stop oil shooting even higher. The bank has raised its one-month forecast for the global crude benchmark to US$115 (RM482) with significant upside risk.

       The invasion of Ukraine has upended commodity markets from oil to gas and wheat, increasing inflationary pressure on governments seeking to encourage economic growth after the pandemic.

       While the United States and Europe have so far stopped short of imposing sanctions directly on Russian commodities, the trade in those raw materials is seizing up as banks pull financing and shipping costs surge.

       Russia is the world’s third-biggest oil producer and the second-most influential member of the Organisation of the Petroleum Exporting Countries or Opec+ alliance behind Saudi Arabia.

       The turmoil sparked by the invasion is likely to make the task of balancing the tightening market harder for Opec+, which met yesterday to discuss output policy. Delegates said the cartel would probably stick to its plan of only gradually increasing supply.

       The group’s joint technical committee, which analyses the market on behalf of ministers, met yesterday.

       “Any SPR release would only be a short term solution, particularly if Russian oil flows were significantly disrupted,” said Warren Patterson, Singapore-based head of commodities strategy at ING Groep NV.

       “I do not believe the market is pricing in a significant impact to Russian oil exports, and so that leaves a lot of upside risk if the situation deteriorates further.”

       Talks on the coordinated release are currently focused on tapping 30 million barrels from the US SPR and an equivalent amount from a group of other countries.

       No decisions have been made and the discussions could continue for several more days. Prior to the pandemic, global oil consumption was about 100 million barrels a day.

       The White House has said that directly sanctioning Russia commodities is on the table and Goldman Sachs said markets need to reflect this risk.

       Oil trader Pierre Andurand estimated about three million barrels a day of crude would be lost if this happened, assuming China would take an additional one million barrels a day. This is an amount the world can absorb to some extent, given reserves releases and more output from the Persian Gulf, he told Bloomberg Television.

       Brent remains deep in backwardation, a market structure where prompt barrels command higher prices than later-dated cargoes, indicating nervousness over tightening supply. — Bloomberg