Prices for both gold and oil continued to surge on Tuesday, with energy stocks and precious metal miners both being among the day’s best performers. In addition to everything that’s going on in Ukraine, traders reacted to the news today about President Biden’s ban on Russian gas and oil exports. Not only was this an unexpected move given how high American gas prices are, but some are now claiming that oil could easily skyrocket to over $300/barrel if this ban is actually implemented.
According to a new executive order implemented today, the U.S. has immediately begun banning new Russian oil shipments, as well as natural gas, coal, and petroleum products. The order would give American companies a 45-day period to wind down their existing Russian contracts while also blocking any new investments in Russia’s energy sector.
We’ve already seen countless American companies divest their existing Russian holdings. International oil giants like Shell are pulling out of Russia altogether, a move that’s expected to drastically reduce their current oil output.
In response, oil surged to around $128 per barrel during Tuesday’s trading session, while gold prices broke past their previous resistance level to over $2,060/ounce. Many investment banks now predict prices will rise as high as $150-$200/barrel, while some Russian sources threaten it could go much higher.
This includes Russian Deputy Prime Minister Alexander Novak. During an address on state television, the top Russian official warned that prices could easily surge to over $300 per barrel, especially if they decide to shut down a major gas pipeline to Germany as retribution for the U.S. oil ban.
“It is absolutely clear that a rejection of Russian oil would lead to catastrophic consequences for the global market,” said Novak. “The surge in prices would be unpredictable. It would be $300 per barrel if not more. So far, we are not taking such a decision. But European politicians with their statements and accusations against Russia push us towards that.”
In response, it seems that Western European governments have backed away from a more coordinated ban on Russian energy exports. Russia remains the third-largest oil producer, with Europe deriving half of all its energy from Russia.
With prices expected to continue to go up, it’s not surprising that oil stocks were among Tuesday’s top performers. This includes companies like Enservco (NYSE: ENSV) and Nine Energy Service (NYSE: NINE), whose shares were up over 68% and 58.4% today, respectively.
Other stocks that were up on these Russian oil concerns were electric vehicle companies. Governments around the world have been accelerating the move towards renewable energy thanks to these Russia concerns. That’s another reason why EV stocks have done so well in recent weeks.
Companies like Ballard Power (NASDAQ: BLDP), CBAK Energy (NASDAQ: BKAT), and Aryo (NASDAQ: ARYO) were all up by double-digit margins on Tuesday. In contrast, Chinese EV stocks were down a few percent, with the Chinese government encouraging its companies to buy from Russian suppliers instead of their normal sources. Tesla (NASDAQ: TSLA) was up just a couple of percent, not really moving much on the news.