According to the ‘New York Times’, EU officials are working on a plan to gradually reduce oil imports from Russia, to give member countries time to find alternative suppliers.
(Boursier.com) – Oil prices rose Thursday for the third consecutive session, concerns about the decline in Russian supply having increased in recent days. According to press reports on Thursday, the European Union is preparing a plan to end its imports of Russian oil.
The barrel of American light crude WTI (May futures) gained 2.6% on Thursday evening to end at $106.95 on the Nymex, while the Brent of the North Sea took 2.7% to $111.70 for the June contract. Brent prices fell below $100 on Monday for the first time since March 16, but since then, they have therefore quickly rebounded by more than 10%. Note that the oil markets will be closed on Friday in the United States and Europe for the Easter weekend.
EU seeks ways to do without Russian oil
According to the ‘New York Times’, EU officials are working on a plan to gradually reduce oil imports from Russia, to give member countries time to find alternative suppliers. More detailed discussions on the oil embargo would be held after the second round of the French presidential election scheduled for April 24, the ‘NYT’ said.
Russia provides more than 40% of the total gas consumption of the European Union, 27% of European oil imports and 46% of coal imports.
Oil traders are also concerned about the application, from May 15, of an article “5 bis bis” of an EU regulation, which prohibits transactions with Russian public companies, including the energy groups Rosneft and Gazprom Neft. Exceptions are accepted, on condition that the operations envisaged prove “strictly necessary” for the purchase of fossil fuels (gas, oil and coal) and thus contribute to Europe’s critical energy supply.
On April 8, the representatives of the 27 members of the European Union agreed on a new round of sanctions against Russia, including an embargo on Russian coal, but did not take a decision on the oil or gas, on which the EU is very dependent.
On Thursday, ECB President Christine Lagarde said a possible brutal boycott of Russian energy would have a huge impact on the eurozone economy. The impact of the war on the economy will depend on the evolution of the conflict, the effect of current sanctions and possible additional measures, she stressed, adding that inflation has risen sharply and will remain high. over the next few months, mainly due to the sharp rise in energy costs.
3 million fewer Russian barrels on the world market in May
The International Energy Agency (IEA) estimated Wednesday in its latest monthly report that the impact of sanctions against Russia and the reluctance of consumer countries towards Russian oil will be fully felt from May. , with nearly 3 million barrels per day less on the market. For its part, OPEC has warned that the cartel would not be able to compensate for the drop in Russian production in the event of a European embargo on Russian crude in the context of the Ukrainian conflict.
“Russia’s war on Ukraine increases the risk of oil product shortages, despite Joe Biden’s decision to release strategic crude reserves,” said Phil Flynn, senior market analyst at The Price Futures Group. In a note published Thursday, he adds that “the mounting pressure on Russian oil traders to stop funding (Vladimir) Putin’s war machine, represents fundamental support” oil prices, despite a downward revision of global demand by the IEA, due to the war in Ukraine and the rebound of Covid-19 in China.
Russia seeks new customers for its gas and oil
Meanwhile, Russia has been looking for new outlets for its energy. On Tuesday, Energy Minister Nikolai Shulguinov said Russia is “ready to sell its oil and petroleum products to friendly countries at any price range” as Western sanctions force Moscow to reduce its production.
The following day, Russian President Vladimir Putin told a meeting on the development of the Russian Arctic that “we will also increase the supply of energy resources to other regions of the world where they are really needed”, added the President. This is the first time that Vladimir Putin has publicly acknowledged that his country has problems with its energy exports, which require a solution.