Why the oil price is spiking again

1970 Arab states used the “oil weapon” of embargoes to punish Western governments for supporting Israel. On May 30th the heads of the 27 member governments agreed to turn the weapon on themselves, as part of a fresh round of sanctions against Russia following its . As well as cutting off Sberbank, Russia’s largest bank, from the cross-border payment system, the package will also ban purchases of Russian crude oil and refined products, such as diesel, by the end of the year. There would, the said, be a “temporary” exemption for oil delivered through pipelines. The price of a barrel of Brent crude leapt above $120 on the news, its highest level since March.In principle, the decision is highly significant. As well as demonstrating unity, and the bloc’s willingness to bear economic pain to punish Russia, it cuts one of the few remaining trade ties with the Kremlin. It also imperils one of Russia’s most lucrative sources of . The is Russia’s biggest market for crude, buying about half the country’s oil exports.