Oil slips 2% as EU fails to boycott Russian crude

FILE PHOTO: A view shows a local oil refinery in Omsk
FILE PHOTO: A general view shows a local oil refinery behind residential buildings in Omsk, Russia February 10, 2021. REUTERS/Alexey Malgavko/File Photo

March 24, 2022

By Scott DiSavino

NEW YORK — Crude oil prices slumped 2% on Thursday after the European Union (EU) failed to agree on a plan to boycott Russian oil and reports that exports from the Caspian Pipeline Consortium (CPC) terminal in Kazakhstan could be partially reinstated.

European Union leaders will agree to jointly buy natural gas to reduce dependence on Russian fuels at a two-day summit starting on Thursday. Some say they will not comply with Moscow’s demand to buy oil and gas in rubles.

However, EU countries remain at odds over whether to directly sanction Russian oil and gas, a move already taken by the United States.

Brent futures fell $2.57, or 2.1%, to $119.03 a barrel, while US West Texas Intermediate (WTI) crude fell $2.59, or 2.3%, to $112.34.

On Wednesday, both benchmarks closed at their highest levels since March 8th.

Russia’s February 24 invasion of Ukraine prompted the EU to pledge to reduce dependence on Russian fossil fuels by increasing imports from other countries and rapidly expanding renewable energy.

The North Atlantic Treaty Organization (NATO) offered new military aid to Kyiv and sent more troops to its eastern flank as London and Washington imposed new sanctions on Moscow.

But without an EU embargo on Russian oil, Commerzbank analyst Carsten Fritsch said sanctions would not have a major impact on the oil market.

With the EU remaining divided over imposing open bans on Russian oil, Rystad Energy analysts said India and China could import more Russian barrels to boost production of their refined products.

The United States and its allies, meanwhile, were discussing a possible further coordinated release of oil from storage to help calm oil markets.

The dollar also weighed on crude oil prices, gaining for the fourth time in five sessions. A stronger dollar makes oil more expensive for holders of other currencies.

Oil prices fell further after ICE increased margins on May Brent crude futures by 19% effective March 25, the third margin update this year.

Trading was volatile for both crude oil benchmarks, which rose to new two-week highs early in the session on ongoing supply concerns, including early reports that loading of crude oil at Kazakhstan’s CPC terminal was suspended following storm damage.

However, four sources familiar with the matter said oil exports through the CPC pipeline will partially resume on Thursday.

“Reports that the CPC pipeline was returning were a huge relief to the market,” said John Kilduff, a partner at Again Capital in New York, noting that supply disruptions from pipeline shutdowns or Russian sanctions “are a big concern ‘Cause we can’t make up for these barrels.”

Crude oil prices received some support as US crude oil in the Strategic Petroleum Reserve (SPR) fell to its lowest level since May 2002.

U.S. crude at the Cushing Storage Hub in Oklahoma fell in the week ended March 22, traders said, citing a report by data provider Genscape. US government data has shown inventories there have risen over the past two weeks.

Canada said it has the capacity to increase oil and natural gas exports by up to 300,000 barrels per day (bpd) in 2022 to help improve global energy security.

(Additional reporting by Rowena Edwards in London, Mohi Narayan in New Delhi and Liz Hampton in Denver; Editing by David Gregorio, Kirsten Donovan) Oil slips 2% as EU fails to boycott Russian crude


USTimeToday is an automatic aggregator of the all world’s media. In each content, the hyperlink to the primary source is specified. All trademarks belong to their rightful owners, all materials to their authors. If you are the owner of the content and do not want us to publish your materials, please contact us by email – The content will be deleted within 24 hours.

Related Articles

Check Also
Back to top button