(New York) Oil prices soared Wednesday, under the effect of the presentation of a draft embargo of the European Union on Russian imports, which suggests increased tensions on the offer.
Posted at 4:05 p.m.
The benchmark contract for the price of a barrel of Brent from the North Sea, with expiry in July, gained 4.92% to end at 110.14 dollars, its highest level for two and a half weeks. The barrel of American West Texas Intermediate (WTI) for delivery in June, took him 5.27%, to 107.81 dollars.
For Andy Lipow, of the firm Lipow Oil Associates, “the market has revived with the drop in American stocks” of petroleum products, but above all “the EU’s decision to move towards an embargo on Russian oil”.
The European Commission transmitted, overnight from Tuesday to Wednesday, to member countries a proposal for new sanctions against Russia, which contained the total suspension of imports of crude oil within six months and of refined products by the end of 2022.
During a first meeting on Wednesday, several member states expressed their “concern” about the project, a European diplomat told AFP.
Although having been offered a derogation, like Slovakia, Hungary initially rejected the text, which it says it cannot support “in its current form”, according to Hungarian Foreign Minister Peter Szijjarto.
“To the extent that unanimity is required (to adopt the project), it is likely that this will result in a very watered down version, given the current position of Hungary”, estimated, in a note, Bjornar Tonhaugen, analyst at Rystad Energy.
Operators were worried at least as much about another part of the project which provides for the prohibition for European ships to transport Russian oil or refined products.
“These sanctions on ships should weigh on Russian exports much sooner than the six-month delay mentioned by the European Union”, warns Andy Lipow.
Their spectrum could, moreover, go beyond just cargoes to the EU and affect a good part of the transport of oil from Russia, all destinations combined, including Asia, largely carried out by European tankers. .
For Andy Lipow, prices were also strengthened by the marked decline in US crude stocks.
Another element of support for the market, the significant reduction in stocks of gasoline and distilled products, mainly diesel, already at low levels, due to the slowdown in refining.
Inventories could fall further by the end of May, Andy Lipow warns, as many US refineries are undergoing maintenance.