EU leaders agree to ban most Russian crude oil imports (Commodity:CL1:COM)

EU leaders agree to ban most Russian crude oil imports (Commodity:CL1:COM)

Bet_Noire/iStock via Getty Images

Fresh supply concerns in world energy markets sent WTI crude futures (CL1:COM) up 4% to over $119 per barrel for the first time in March, when sanctions began to target Russia for its invasion of Ukraine. Brent crude (CO1:COM) already touched the new symbolic $120 level on Monday, while U.S. gasoline prices surged to another record, dealing a fresh blow to consumers ahead of the summer driving season and peak energy demand. The national average for a gallon of gas is now hovering around $4.62, according to AAA, as millions of Americans come back from their Memorial Day outings and holiday getaways.

Next shakeup: EU leaders have reached an agreement to ban 90% of Russian crude by the end of the year as part of a sixth sanctions package the bloc is putting together against Moscow. Seaborne deliveries of Russian oil would be forbidden under the new arrangement, though it would include a temporary exemption for pipeline transfers until a solution is found that would meet the energy needs of Hungary and other landlocked countries like Slovakia and the Czech Republic. “This immediately covers more than 2/3 of oil imports from Russia, cutting a huge source of financing for its war machine,” tweeted European Council President Charles Michel. “Maximum pressure on Russia to end the war.”

However, questions are swirling about the effectiveness of the ban, with more Russian oil than ever on board tankers heading to India and China. That crude is now trading at around $90 a barrel, significantly cheaper than the price of Brent or West Texas Intermediate. Estimates vary on how much it costs Russia to produce a barrel of oil, but with Russia’s energy minister deeming crude prices of $55-70/bbl as “optimal” just days before the war, Russia still appears to be making big profits on its latest sales as long as it keeps finding buyers.

More energy worries: OPEC+ is scheduled to meet on Thursday, but the producer group still looks set to rebuff Western calls for speeding up increases to their oil output. Markets are also on edge after the Iranian Navy seized two Greek oil tankers in retaliation over the confiscation of Iranian oil by the U.S. from a tanker held off the Greek coast. “This raises the specter of further disruptions to oil flows through the Strait of Hormuz, which carries a third of the world’s trade,” ANZ Research analysts wrote in a research note. Meanwhile, Denmark and Netherlands are set to join Bulgaria, Poland and Finland in having their gas supplies turned off by Russia after the two nations rejected Moscow’s demands to make payments in rubles.


Originally Posted on:

Written by:

10,504 Posts

View All Posts
Follow Me :

Leave a Reply

%d bloggers like this: