In order to rally Hungary to their plan, the EU countries, meeting in summit Monday and Tuesday in Brussels, could decide to block Russian oil imports, with the exception of pipeline deliveries.
(Boursier.com) — Oil prices ended the week on the rise, as investors anticipate solid demand for fuels in the United States, where the summer holiday season is approaching, as well as in China, where the containments linked to Covid are gradually being lifted.
In addition, European Union leaders, who will meet for a summit in Brussels on Monday and Tuesday, were struggling on Friday to find a compromise to implement their embargo on Russian oil, which Hungary has so far refused to agree to. ‘to apply.
Friday evening, the barrel of American light crude WTI (July futures) gained 0.9% to $115.07 on the Nymex, while the Brent of the North Sea July expiry took 1.7% to $119.40. Both varieties of rough have gained around 2% this week.
Russian pipeline deliveries would be excluded from the embargo
In order to win Hungary over to their plan, EU countries could decide to block Russian oil imports, with the exception of pipeline deliveries (which supply Hungary in particular)according to several officials quoted by ‘Reuters’ on Friday.
According to the Brussels-based think tank Bruegel, about a quarter of Russian oil sold to the 27 EU member countries is delivered by pipeline. The Druzhba pipeline, in particular, crosses Slovakia, the Czech Republic and Hungary, the three EU countries most dependent on Russian crude and who will have the most difficulty finding alternative solutions.
“The idea is to split the oil embargo between deliveries by pipeline and deliveries by sea,” said an official quoted by ‘Reuters’. “Deliveries by pipeline would be exempt from sanctions while alternatives are found,” he added. According to another official, an agreement could be sealed by the ambassadors of the EU member states in Brussels on Sunday, just before the summit leaders scheduled for Monday and Tuesday.
Towards a barrel of Brent at $150?
The analysts of Bank of America Global Research estimated in a note published on Friday that the barrel of Brent North Sea could exceed $150 in the event of a sharp drop in Russian oil exports.
Shortly after the invasion of Ukraine by Russia on February 24, the barrel of Brent had exceeded $139 on March 9, the highest since 2008, and that of WTI had risen to $130.5.
“With our Brent target of $120 a barrel now in sight, we believe a sharp contraction in Russian oil exports could (…) push Brent well past $150 a barrel,” BofA said. in his note.
No shortage in France, but new fuel price increases in sight
Russia, the world’s second largest oil exporter, produces around 11 million barrels a day of crude, of which just over 5 million are exported. The country also exports 1.5 mbd of diesel, of which European countries, and in particular France, are big consumers.
Russia thus represents 10 to 12% of French crude oil imports and 20 to 25% of diesel imports in France, according to Ufip, the organization representing French industrialists in the sector.
The president of Ufip, Olivier Gantois, estimated Friday in an interview with the AFP agency that France should not suffer from a fuel shortage linked to a Russian embargo, but that prices could still increase because of the resulting change in sources of supply.