Oil races back above $100 a barrel
By Matt Egan, CNN Business
(CNN) -- Turbulence in the oil market continued on Tuesday, with crude prices soaring back above $100 a barrel on concerns about a loss of supply of oil from Russia and signs that lockdowns in China may be easing.
US crude jumped 7% to $100.84 a barrel in recent trading. Brent crude, the world benchmark, gained 6.2% to $104.62 a barrel.
The sharp gains come after oil prices fell on Monday to the lowest level since the beginning of the war in Ukraine in part due to worries about China's Covid lockdowns hurting demand for energy.
Although Covid cases in Shanghai remain high and most of the city remains in lockdown, officials began lifting lockdown measures in some neighborhoods on Monday.
"That demand destruction event may be coming to an end. We are taking those first baby steps," said Robert Yawger, vice president of energy futures at Mizuho Securities.
At the same time, OPEC on Tuesday slashed its forecast for Russian oil production in 2022 by 530,000 barrels due to the war in Ukraine and penalties imposed on Moscow. OPEC upgraded its projection for US output this year, but only by 260,000 barrels per day.
Meanwhile, there are concerns about how to replace Russian oil sidelined by the conflict.
The leader of OPEC warned European Union officials on Monday that current and future sanctions and other voluntary actions against Russia could cause the loss of 7 million barrels per day of Russian oil, Reuters reported.
"Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude," OPEC Secretary General Mohammad Barkindo said, according to a copy of his speech seen by Reuters.
Tom Kloza, global head of energy analysis at the Oil Price Information Service, described the 7 million barrel figure from OPEC as "apocalyptic" in terms of the impact on prices. The International Energy Agency previously warned Russia could be forced to limit output by 3 million barrels per day in April.
The European Union on Tuesday reiterated its call for "oil and gas producing countries to act in a responsible manner" and to "examine their ability to increase deliveries to international markets."
"OPEC has a key role to play," said European Commission spokesperson Adalbert Jahnz.
Kloza said the wild swings in oil prices partially reflect a lack of participation in the market.
"This is very similar to 2008," Kloza said, referring to the year oil prices surged to record highs.
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