Oil prices extend rally on Russia embargo talks as stocks rise

Oil prices extended their rally Tuesday on supply worries as European leaders debated banning imports from Russia, while equities advanced despite a tepid Wall Street lead and the prospect of a sharper hike in US interest rates.

Both main crude contracts started the week by soaring more than seven percent Monday as EU nations discussed following Washington and putting an embargo on Russian energy imports over its war in Ukraine.

Some members are pushing to ramp up pressure on Russian President Vladimir Putin with more sanctions, though others, including Germany -- which still relies on Moscow's fuel -- have been reluctant to target key sectors.

Adding to the pressure, Saudi Arabia warned that Yemeni rebel attacks on its oil facilities pose a "direct threat" to global supplies, after Red Sea facilities belonging to giant Saudi Aramco were targeted.

The jump in oil prices has been a driver of turmoil on world markets in recent weeks as demand surges owing to economic reopenings just as supplies are strained.

That, along with a spike in the cost of other key commodities, such as metals and wheat, caused by the war, has sent inflation rocketing and caused a headache for central banks already trying to wind down pandemic-era monetary policies.

There is a growing fear that the global economy could endure a period of stagflation in which prices soar but growth stalls.