Crude oil, gas prices surging as Russia continues attack on Ukraine

Average U.S. gas prices are flirting with record highs as oil prices soar to around $130 per barrel, factors tied to the war in Ukraine and the global economic uncertainty that looms on the wake of Russia's unprovoked attacks on Ukraine.

As the world rallies to levy heavy sanctions on Russia, the global oil and gas sector is taking a hit. President Biden said March 8 that the U.S. would ban all imports of Russian oil, gas and energy. Europe has not yet taken such steps.

The U.S., though the largest oil producer, also is the world's largest consumer and relies heavily on imports to feed that demand. The Associated Press reports that "the U.S. imported 245 million barrels of oil from Russia last year—about 8 percent of all U.S. oil imports—up from 198 million barrels in 2020. That's less than the U.S. gets from Canada or Mexico but more than it imported last year from Saudi Arabia."

See our full and ongoing coverage of impacts from the war in Ukraine.

Any cutbacks in the imports of Russian fuels hit hard for any nation, considering that Russia is the third-largest producer of oil and liquid fuels—behind the U.S. and Saudi Arabia—according to the U.S. Energy Information Administration.

Europe, especially, is reliant on Russian energy sources.

Ultimately, the pending and potential disruptions to the supply of oil have led to volatile market costs—both for the price of crude oil and gasoline.

"Crude prices continue to surge in response to the conflict between Russia and Ukraine," AAA said in a March 7 statement. "As the conflict continues, the oil markets will likely respond by increasing the price of crude oil to reflect more risk of disruption to tight global oil supplies this week."

West Texas Intermediate crude oil was pricing at about $120 per barrel around 7 p.m. EST March 7 but had risen to more than $125 by 9 a.m. March 8, according to MarketWatch. That was down just slightly from the more than $126-per-barrel spike overnight from March 6 into March 7.

Brent crude oil pricing hovered around the $124-per-barrel mark around 7 p.m. EST, MarketWatch data showed. Brent crude also saw spikes in pricing in the early morning hours of March 7, topping $130 per barrel at one point and jumping from $118 per barrel to $128 per barrel at 11 p.m. GMT. It had risen to nearly $130 per barrel by 9 a.m. EST March 8.

By 12:30 p.m. EST March 9, a little more than 24 hours after Biden said the U.S. would ban the import of Russian oil, WTI prices had dropped to around $116 per barrel, according to MarketWatch. Brent prices also had fallen to about $119 per barrel.

Overall, the recent costs for both WTI and Brent crude are significant increases over the $92.81 and $95.42 per barrel, respectively, on Feb. 24, the day Russia invaded Ukraine.

To help mitigate anticipated shortages, the International Energy Agency detailed March 1 a coordinated release of crude oil from its 31 member countries' strategic reserves, including the U.S., Germany, Canada, South Korea, and Mexico. IEA member states committed to releasing a total of 61.7 million barrels from their strategic reserves to reassure markets reeling from the uncertainty surrounding Russia's war with Ukraine.

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"The decision taken to release emergency stocks—for only the fourth time in the IEA's history—has sent a strong message that IEA members are unified in support of Ukraine and will do all they can to provide stability to the market during these difficult days," Fatih Birol, executive director of Paris-based IEA, said in a statement. "Events in Ukraine remain deeply distressing and the impacts on energy markets are becoming more pronounced. We continue to monitor the situation closely. If necessary, we are ready to recommend additional steps to build on this initial release."

AAA said March 7 that while significant, the amount of oil to be released from the IEA's strategic reserves won't go far enough in closing the gap and keep crude oil prices down.

"This amount—half of which is expected to come from the U.S.—is the largest coordinated release since IEA was founded in 1974," AAA said. "Despite this announcement, the impact on pricing has been limited given that the amount of oil planned for release is small in comparison to the amount that flows daily from Russia to other countries around the globe."

IEA data shows that Russia exports approximately 5 million barrels of crude oil each day, accounting for about 12 percent of its global trade. Additionally, domestic crude stocks decreased by 2.6 million barrels during the week of Feb. 28 to 413.4 million barrels. The current stock level is approximately 15 percent lower than at the end of February 2021, contributing to pressure on domestic crude prices.

With crude oil prices skyrocketing, gas prices are along for the ride.

GasBuddy reported early March 7 that U.S. gas prices climbed into the record-high territories that emerged during the Great Recession of 2008. The company, which monitors prices at 150,000 gas stations across the U.S., called the spikes in gas prices "unprecedented," reporting an average national price of about $4.06 per gallon. That's roughly 20 cents shy of the all-time record high set in 2008.

"Forget the $4 per gallon mark, the nation will soon set new all-time record highs and we could push closer to a national average of $4.50 (per gallon)," Patrick De Haan, head of petroleum analysis at GasBuddy, said in a statement.

California, he added is likely to see gas prices as high as $6 per gallon in the near future. And it's a price point that likely won't see relief any time soon.

"Americans have never seen gasoline prices this high, nor have we seen the pace of increases so fast and furious," De Haan said. "That combination makes this situation all the more remarkable and intense, with crippling sanctions on Russia curbing their flow of oil, leading to the massive spike in the price of all fuels: gasoline, diesel, jet fuel and more."

AAA reported similar numbers. The $4.06 average marked a 45-cent increase over the previous week, a 62-cent increase over the previous month and a $1.30-cent increase compared to the same period a year ago, AAA said.

The AP reports that gas prices in Europe are surging even further, averaging about 1.75 euros a liter, the equivalent of about $7.21 a gallon, according to the European Commission.