Oil prices extended their rally on Thursday, with Brent rising above $119 a barrel, as trade disruption and shipping issues from Russian sanctions over the Ukraine crisis sparked supply worries while U.S. crude stocks fell to multi-year lows.

The Organization of the Petroleum Exporting Countries and their allies including Russia have decided to maintain an increase in output by 400,000 barrels per day in March despite the price surge, ignoring the Ukraine crisis during their talks and snubbing calls from consumers for more crude.

Brent crude futures rallied to $116.83 a barrel, the highest since August 2013. The contract was at $116.60 a barrel, up $3.67 by 0112 GMT.

U.S. West Texas Intermediate crude was at $113.01 a barrel, up $2.41 after touching a fresh 11-year high of $113.31 a barrel.

"The White House ratcheted up pressure on Russia with the announcement that it will apply export controls targeting Russian oil refining," ANZ analysts said in a note.

"This raises concerns that Russian oil supplies will continue to hit constraints."

The market was reacting to the latest round of sanctions by Washington on Russia's oil refining sector that raised concerns that Russian oil and gas exports could be targeted next.

So far, it has stopped short of targeting Russia's oil and gas exports as the Biden administration weighs the impacts on global oil markets and U.S. energy prices.

Russia is the world’s No. 3 oil producer and the largest exporter of oil to global markets, according to the International Energy Agency. Russian crude and oil products exports reached 7.8 million barrels per day in December, the agency said.

Meanwhile, U.S. oil inventories continued to decline. The key Cushing, Oklahoma crude hub's tanks were at their lowest since 2018, while U.S. strategic reserves dropped to a near 20-year low - and that was before another release announced by the White House on Tuesday in tandem with other industrialised nations.

Reuters