Oil Falls as EU Excuses Russia’s Crude from Sanctions
Oil traded lower early on Friday, falling for a second session as the European Union decided to back off from banning Russian oil imports amidst an energy crunch that hit major consumers.
Meanwhile, shipments of Kazakhstan crude resumed at the Black Sea oil terminal that Russia earlier this week claimed would be closed for as much as two months due to storm damage.
West Texas Intermediate crude for May delivery was last seen down $2.72 to $109.62 per barrel, while May Brent crude, the global benchmark, was down $2.75 to $116.28.
The drop comes as worries that storm damage to the oil terminal loading crude from the Caspian pipeline that shut in about one-million barrels per day of supply was much less significant that Russian claims.
Russia’s oil minister earlier this week warned that repairs would take up to two months. Reports show that shipments have partially resumed at the site.
“The storm damage to the export terminal at the Black Sea does not appear to be quite as dramatic as initially described by Russia. According to the Kazakh energy minister, oil exports at one of the three mooring points can already be resumed today.
“The other two should be operational again in three weeks’ time, though the minister added that only two are really needed for the terminal to handle its normal volume,” Commerzbank analyst Carsten Fritsch said in a note.
The EU failed to agree on banning Russian oil imports on opposition from Germany and others reliant on energy exports from the country, even as its war on Ukraine continues. READ: BP Exits Russia’s Rosneft at Cost of $25bn
The United States and the European Union agreed on Friday to reduce the continent’s reliance on Russian energy by securing an additional 15 billion cubic meters of liquefied natural gas imports.
Yesterday, oil prices were a little flat after spiking higher on Wednesday in response to apparent storm damage on the Caspian Pipeline Consortium (CPC) that will affect around a million barrels per day from Kazakhstan for up to a couple of months.
Coming at a time when the market is already extremely tight, it could ensure prices remain higher and vulnerable to further increase, said Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA in a commentary.
OPEC expressed its unease to the EU regarding a proposed ban on Russian oil. READ: Fitch Downgrades Russia, Cites Imminent Default
“In much the same way that Western leaders have had their requests for additional oil production overlooked in recent months as prices have surged, I can’t help but think OPEC’s concerns will fall on deaf ears”, Erlam said.
Germany Reduces Reliance on Russian Energy Imports
German Economy Minister Robert Habeck said that the country made progress in reducing its exposure to and reliance on imports of Russian gas, oil and coal, Reuters reported Friday.
Russian oil imports now account for 25% of German imports, compared with 35% before Russia’s invasion of Ukraine. Similarly, gas imports have been reduced to 40% from 55% and hard coal imports have been cut down to 25% from 50%.
The minister requested gas supply boosts from Qatar and Norway, the news outlet noted. Germany could entirely cut its dependence on Russian oil by the end of 2022, Russian coal by the autumn of 2022 and Russian gas by the summer of 2024. #Oil Falls as EU Excuses Russia’s Crude from Sanctions
