Oil prices surge, gas hits new high after EU cracks down on Russia

Americans filling their gas tanks are feeling intensifying economic reverberations from the war in Ukraine.

Fuel prices set a record Tuesday after the European Union agreed to a partial ban on Russian oil, the bloc’s most significant economic move yet to punish Moscow for the unprovoked invasion. The US average for a gallon of gasoline now stands at $4.62, according to AAA; that’s 52 percent higher than last year and an inflationary pressure point that can choke consumer spending and flatten economic growth.

Drivers in seven states — including Illinois, Nevada, and Oregon — are averaging $5 or more a gallon while Californians are shelling out more than $6. Motorists in every other state are paying at least $4 a gallon, on average.

The European Union agreed Monday to curtail the use of Russian oil within months, an effort it said would cut roughly 90 percent of oil imports to the member nations. But the bloc made concessions to exempt pipeline deliveries, and several countries will get extensions or exemptions to the ban, according to EU officials and diplomats.

Pavel Molchanov, an analyst with the investment bank Raymond James, said that because the EU embargo only targets tanker deliveries, at least for now, the global market can adjust by rerouting seaborne shipments. So instead of shipping oil to European countries, he said, Russia will boost shipments to other markets, such as China, India, and Turkey. In turn, those countries will buy less oil from the Mideast, whereas more Middle Eastern oil will go to Europe, he said.

‘’Ultimately, it will cancel out, or just about, in the sense of global supply,’’ he said.

Still, Russian oil exports had fallen even before the embargo, partly because several major marine shipping companies had refused to transport Russian cargo, including petroleum.

The cost of crude soared above $120 a barrel in March, following the Russian invasion. Prices at the gasoline pump soon followed and spiked nearly 20 percent. But even as oil prices began to ease in the weeks that followed, fuel prices remained elevated. This speaks to a phenomenon economists call ‘’rockets and feathers.’’ While a sudden jump in crude prices can propel gas prices up quickly, like a rocket, the same cannot be said when the momentum shifts. When oil falls, gasoline prices tend to drift down, like a feather.