Oil price advances again for a second day as the U.S. and Europe prepare to impose fresh wave of sanctions against Russia for the alleged violence against the civilians in Ukraine.
The West Texas Intermediate (WTI) crude and the Brent oil prices are moving higher and have surged to nearly $105/barrel and $190/barrel respectively in the early Asian trading after closing 4% higher on Monday, the biggest gain in two weeks. The new package may further target Russia’s oil industry as the United Nations Security Council is set to discuss alleged Russian war crimes at a meeting tonight.
Oil prices have rallied to the highest since 2018 in the first quarter of 2022 as Russia’s invasion disrupted the supplies of oil in the already tight market faced with roaring demand and dwindling inventories. However, the U.S. and U.K have moved to bar the Russian oil and there is a possibility that the European Union will enact some form of this similar action, though its dependence on the Russian oil is higher.
While the possibility of new sanctions by the U.S. is offsetting the global crude oil market from the nation’s strategic petroleum reserves in a bid to regulate prices and peg back inflation, other countries are now set to begin oil releases.
With the Russian-Ukraine war in its second month already, European policy makers are facing intense pressure as to impose heavier sanctions on Moscow, the capital of Russia. While, German Finance Minister, Christian Lidner said all economic ties with Moscow must be severed, the French President, Emmanuel Macron has stated that the EU will discuss possible sanctions on oil.
The European embargo on those Russian oil exports would have a far-reaching impact on the global energy market. Even though, the United States is considering the imposition of another round of sanctions on Russia with a complete ban of the oil by April 21, many western companies are not taking Russian crude despite being offered at discounted rates. On Monday, a commodity trader, Trafigura Group offered to sell a cargo of Russia’s Urals grade at a record discount but there were no bids for the shipment.