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BENGALURU: Oil prices spiked to their highest levels since 2008 on Monday amid market supply fears as the United States and European allies considered banning Russian oil imports and prospects for a swift return of Iranian crude to global markets receded.

Brent crude reached $139.13 a barrel and US West Texas Intermediate (WTI) hit $130.50 in early trading, the highest levels for the benchmarks since July 2008.

By 10:56 a.m. EST (1556 GMT), Brent had gained $4.93, or 4.2%, to $123.04 a barrel, and WTI was up $3.23, or 2.8%, to $118.91 a barrel.

“The original spikes were on embargo worries, but then a lot of countries came out and said they won’t do it,” said Bob Yawger, director of energy futures at Mizuho. “Western European countries are not in a position to embargo, and that’s why markets are lower now as people are starting to realize it.”

Global oil prices have spiked about 60% since the start of 2022, along with other commodities, raising concerns about world economic growth and stagflation. China, the world’s No. 2 economy, is already targeting slower growth of 5.5% this year.

US Secretary of State Antony Blinken said on Sunday the United States and European allies were exploring banning imports of Russian oil, while the White House was coordinating with committees in Congress to move forward with a US ban.

“We consider $125 per barrel, our near-term forecast for Brent crude oil, as a soft cap for prices, although prices could rise even higher should disruptions worsen or continue for a longer period,” UBS commodity analyst Giovanni Staunovo said.

A prolonged war in Ukraine could see Brent moving above $150 per barrel, he said.

Analysts at Bank of America said if most of Russia’s oil exports were cut off, there could be a shortfall of 5 million barrels per day (bpd) or larger than that, pushing prices as high as $200. JP Morgan analysts said oil could soar to $185 this year, and analysts at Mitsubishi UFJ Financial Group Inc (MUFG) said oil may rise to $180 and cause a global recession.

IRAN TALKS

Russia is the world’s top exporter of crude and oil products combined, with exports of around 7 million bpd, or 7% of global supply. Some volumes of Kazakhstan’s oil exports from Russian ports have also faced complications.

The head of Japan’s largest business lobby said the country’s imports of Russian crude could not be replaced immediately. Russia is Japan’s fifth-biggest supplier of crude oil and liquefied natural gas (LNG).

Meanwhile, talks to revive Iran’s 2015 nuclear deal with world powers were mired in uncertainty after Russia demanded a US guarantee that sanctions it faces over the Ukraine conflict would not hurt its trade with Tehran. China also raised new demands, sources said.

Iran’s Foreign Minister Hossein Amirabdollahian said Tehran would not allow “any foreign elements to undermine its national interests,” Iran’s state media reported, while the foreign ministry said it awaited an explanation from Russia.

France told Russia on Monday not to resort to blackmail over efforts to revive the nuclear deal, while Iran’s top security official said the outlook for the talks “remains unclear.”

Iran will take several months to restore oil flows even if it reaches a nuclear deal, analysts said.

Separately, US and Venezuelan officials discussed the possibility of easing oil sanctions on Venezuela but made scant progress toward a deal in their first high-level bilateral talks in years, five sources familiar with the matter said, as Washington seeks to separate Russia from one of its key allies.

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