Oil Surges to $80 over Latest Sanctions on Russia
Oil prices increased sharply this week, with Brent closing near $80 per barrel in the latest sanctions against Russian crude by the United States. Brent crude rose by about 3% to $80.02 per barrel on Friday, marking its highest level in three months. At the same time, West Texas Intermediate (WTI) crude was trading at $75.42 per barrel.
The US Department of the Treasury stated that comprehensive measures were taken to fulfil the G7 commitment to reduce Russia’s energy revenues, including adding Gazprom Neft and Surgutneftegas, two of Russia’s largest oil producers and exporters, along with their affiliates, to the sanctions list.
The statement also mentioned that over 30 Russian oil field service providers were added to the sanctions list, and several high-ranking Russian energy officials and executives, including top managers of Russian oil producers, were targeted by the sanctions.
US Secretary of the Treasury Janet Yellen emphasised that these sanctions were aimed at countering Russia’s largest source of revenue, which is used to finance its ‘brutal and illegal’ war against Ukraine.
Meanwhile, according to the US Department of State, around 80 entities and individuals involved in liquefied natural gas (LNG) production and export activities were also sanctioned under the latest measures against Russia. Oil market sentiment remains positive on the back of colder weather across parts of the Northern Hemisphere, which is likely to boost oil demand.
In addition, spot Asian LNG is trading at a premium to oil, increasing the risk of substitution. Meanwhile, uncertainty over how hawkish Trump will be with Iran will be providing some support.
Asian buyers have already been looking for alternative grades from the Middle East, with broader sanctions against Russia and Iran making this oil flow more difficult. This move had pushed the Brent-Dubai spread into negative territory in recent weeks, although it has since reverted to a premium.
European Gas Price Slumps by 9% in 1-Week
European natural gas prices came under further pressure as Dutch natural gas TTF fell by 1.26% to settle just below EUR45/MWh. This leaves total declines at more than 9% so far this week, commodities strategist at ING said in a Friday note.
Analysts said the forecast for North West Europe shows some milder weather next week, which will be easing some concerns. ING analysts said the spread between European and Asian LNG prices means that Europe should be a more attractive market for LNG.
EU storage is now 68% full, down from 83% at the same time last year and below the five-year average of 74%. In Europe, refined product inventories in the ARA region increased by 50kt week on week to 6.77 mt, according to analysts note.
The increase was driven by gasoline stocks, which grew by 120 kt. All other products saw a decline in inventories, with gasoil stocks falling by 35kt. However, with gasoil inventories still standing at 2.47 MT, they are at very comfortable levels for this time of the year. #Oil Surges to $80 over Latest Sanctions on Russia ECOWAS Issues Deadline to Bukina Faso, Mali, Niger
