Oil prices are rising today due to the European Union announcing that it will impose an embargo on black gold exported by Russia, due to the war in Ukraine, which will increase the problems and tensions on the supply side.
The benchmark contract for Brent North Sea barrel for delivery in July rose 4.92% to close at $ 110.14 a barrel, the highest level in two and a half weeks. West Texas Intermediate (WTI) delivery in June rose 5.27% to close at $ 107.81.
According to Andy Lipau of Lipow Oil Associates, the rise in prices is due to the “reduction of US stocks” of petroleum products, but above all due to “the EU decision to impose an embargo on Russian oil.”
The European Commission distributed its proposal to the 27 for the sixth package of sanctions against Moscow on Tuesday night. It included the complete cessation of imports of Russian crude (in six months) and refined products (by the end of 2022).
Several member states expressed their “concern” over the proposal yesterday, a European diplomat told Agence France-Presse.
Although it was offered an exemption, as in Slovakia, Hungary rejected the proposal, stressing that it could not support it “in its current form”, as put forward by Hungarian Foreign Minister Peter Sigiarto.
“As unanimity is required (for the adoption of the Commission proposal), its final form is likely to be very softened, given Hungary’s current position,” Rjadad Energy analyst Bjornar Tonhaugen said in a note.
Market participants are equally concerned about another aspect of the plan, which calls for a ban on European ships carrying slow or refined products from Russia. “Sanctions on ships will be much heavier on Russian exports,” warns Andy Lipau.
Because the measure goes far beyond cargo deliveries to the EU, it accounts for much of Russia’s oil exports to any destination, including Asia, which is guaranteed by European tankers.
For Mr. Lipau, prices are also rising due to the significant decline in US crude stock. Stocks may shrink even further by the end of Ma
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