U.S. oil prices were rallying Tuesday morning amid a standoff between Russia and Western powers over Ukraine. Russian President Vladimir Putin’s decision to start regarding two long-embattled Ukrainian regions, Donetsk and Luhansk, as independent states in order to base Russian troops there has had the international community as well as world markets in disarray.
As Russia is a major oil and natural gas producer, sanctions against the country or willful disruption by Russia in the case of a conflict are expected to lead to energy shortages, in turn driving up prices on the world market. U.S.-produced West Texas Intermediate crude oil cost almost $95 per barrel on Tuesday morning and is expected to break the $100 mark as the conflict drags on.
While U.S. oil production has made strides by employing the controversial fracking method, a higher domestic output does not currently insulate the U.S. energy supply from major price fluctuations on the international markets.
An oil price of around $100 per barrel is the highest the WTI has seen since late 2014. That year, prices reached a high of $107 in June before collapsing amid an oversupply caused in part by the new U.S. zeal for fracking, again showing that energy independence does not currently guarantee stable prices.
WTI prices were even higher in early 2008 – at around $140 a barrel – because of supply shortages and high demand from China, before the financial crisis set an end to that. The coronavirus pandemic let oil prices collapse in early 2020, when the price of WTI crude briefly turned negative, meaning that traders were trying to offload oil as a world paralyzed by travel restrictions was not buying the commodity and expensive oil storage was overflowing.
This chart shows the daily price per barrel of WTI crude oil (in U.S. dollars).
