Oil prices slip as Biden stops short of sanctioning Russian crude | CBC News

The European oil benchmark, Brent crude, slid to $98 US on Friday after topping $105 a barrel a day earlier, its highest level since 2014. 

The North American benchmark, West Texas Intermediate, fell slightly to $92 after flirting with $100 on Thursday.

“The sanctions will not target the oil flows as we go forward,” Amos Hochstein, the U.S. State Department’s senior energy security adviser, said in an interview on Bloomberg Television.

Russia is the third-largest oil producer in the world, responsible for about 10 per cent of global supply. If the U.S. and European countries decided to invoke sanctions on Russian crude, global prices would likely rise.

Oil and natural gas is a major source of funding for Russia, accounting for about 36 per cent of the country’s total revenue.

“Instead of holding signs saying, ‘We stand with Ukraine,’ wouldn’t it be nice to say, ‘We’re not buying your oil, Russia?,'” said Martin Pelletier, a Calgary-based portfolio manager at TriVest Wealth Counsel.

“There’s no way given the supply situation and the shortages and the growth in demand in Europe that they’re going to want to not take those hydrocarbons from Russia,” he said.

WATCH | Biden lays out U.S. sanctions on Russia:

U.S. leads western countries in new sanctions against Russia

U.S. President Joe Biden announced new sanctions targeting Russia’s economy, especially its military and aerospace sector, after the country’s invasion of Ukraine. Numerous G7 leaders followed suit, but NATO ruled out sending troops into Ukraine. 2:45

Sanctions on insurance, banking could impact crude

Europe is Russia’s main market for its oil and natural gas exports. Canada imports very little Russian oil.

While the Biden administration decided not to sanction Russian oil, the actions of the U.S. and Europe against other sectors may still have an impact on oil and gas exports. 

So far, the White House has implemented measures to isolate Russia from the global financial, tech and trade systems.

“The indirect effect of sanctions on the banking sector and the insurance sector may complicate Russia’s ability to export crude, although probably not so much to Asian customers, more so to customers in Europe and the U.S.,” said Robert Johnston, a special advisor on energy and climate to Eurasia Group based in Washington, D.C.

North American oil prices remain close to multi-year highs and have doubled in value since the beginning of the year.

“The level of uncertainty that comes with war is unprecedented,” said Richard Masson with the University of Calgary’s School of Public Policy.

[[Oil] is one of the things that [Russia] values the most. That’s where they make their export dollars, and that’s why everybody’s saying that [sanctions] are a tool that really could have a bite,” he said.

‘A massive payday’

In North America, gasoline prices are setting records in several cities. Meanwhile, Canadian oil producers are enjoying hefty profits. Revenues and cash flow in the oilpatch are expected to hit unprecedented levels this year if oil prices stay strong.

“All producers of commodities in Canada are right now having a massive payday,” said Rory Johnston, managing director and market economist at Price Street in Toronto.

Calgary-based Baytex Energy is the latest producer to release its quarterly earnings report showing escalating profits. 

On Thursday, the company said it earned $563 million Cdn against the backdrop of surging oil and gas prices, compared to $221 million in the same quarter last year.

WATCH | How Russia’s invasion could impact oil prices:

Ukraine uncertainty bad for oil long term, money manager says

Barry Schwartz, chief investment officer at Baskin Wealth Management, says an escalation of the Russian invasion into Ukraine will slow economies around the world and potentially bring down the price of oil. (Photo Credit: John Woods/THE CANADIAN PRESS) 0:31