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Oil soars 7% and blows past $110 as Europe debates banning Russian oil

A pumpjack extracts oil near Crane, Texas, U.S., on Sunday, Jan. 30, 2022. Temperatures are forecast to plummet across the oil and natural gas producing areas of Texas later this week, threatening to impact??production??and the power grid. Photographer: Matthew Busch/Bloomberg

(CNN) — Oil prices rose sharply on Monday as Europe considers whether to match America’s ban on Russian oil.

US crude soared 7% to settle at $112.12 a barrel. Brent crude, the world benchmark, also rallied 7% to $115.62 a barrel.

The rally will cast further doubt on how much gasoline prices will retreat from their recent spike to record highs.

The gains come as Europe debates whether to join a US-led embargo on Russian oil. European Union leaders were expected to discuss this critical issue at meetings beginning on Monday.

The problem is that those Russian barrels won’t be easily replaced. Russia was the world’s No. 2 oil producer last year and neither US oil producers nor OPEC appear to be in a rush to ramp up output.

Separately, Saudi Arabia’s state-run media reported on Sunday that Houthi rebels attacked a facility run by the kingdom’s Aramco. The Saudi Ministry of Foreign Affairs said the kingdom disclaims its responsibility for any possible shortage in oil supplies in light of the attacks.

The oil market has been rocked by significant turbulence in recent weeks.

After spiking to a nearly 14-year of $130.50 a barrel earlier in March, US oil plunged to as low as $93.53 a barrel on March 15. Since then, crude is up about 20%.

For now, pump prices, which move with a lag to oil, continue to dip in response to the recent pullback in oil prices.

The national average price for regular gasoline dipped on Monday to $4.25 a gallon, according to AAA. That’s down by 8 cents from the record high of $4.33 a gallon.