Shell Gains on Rising Crude Prices Amid Flak Over Buying Russia Oil

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Shell Gains on Rising Crude Prices Amid Flak Over Buying Russia Oil
Credit: © Reuters.

By Dhirendra Tripathi – ADRs of Shell (NYSE: SHEL ) traded 2.7% higher in premarket Monday after talks of the U.S. pushing for a ban on Russian oil jolted the markets.

The Biden administration is considering whether to prohibit Russian oil imports into the U.S. without the participation of allies in Europe, at least initially, Bloomberg reported. Crude prices soared, climbing to their 14-year high.

Russia is the world’s third-largest oil producer behind the U.S. and Saudi Arabia. The OPEC+ member exported 7.8 million barrels a day of crude, condensate, and oil products in December last year, according to the International Energy Agency, supplying key fuels such as diesel, fuel oil, vacuum gas oil, and a petrochemical feedstock known as naphtha to buyers across Europe, the U.S., and Asia.

Brent Oil Futures touched a high of $130.89 earlier in the day before giving up some of the gains to trade near $126, still up 6.3% at 04:30 ET. Crude Oil WTI Futures traded just over $123 after retreating from a high of $130.33.

Brent’s backwardation, a market structure where prompt barrels are more expensive than later-dated ones, rose to $5.17 a barrel, highlighting the rising anxiety about short-term supply, according to Bloomberg.

Shell got much flak last week for buying a cargo of Russia’s flagship crude at a record discount after saying it would limit business with the Communist country, including divesting from Gazprom (MCX: GAZP ), a Russian majority state-owned energy company.

Defending its action, Shell cited concerns over market interruptions and supply security for "the difficult decision". It went on to commit putting profits from any Russian oil it purchases into a fund that will go towards humanitarian aid to Ukraine.

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