Crude oil price outlook as EU weigh on banning Russian imports
- Crude oil price is reacting to heightened supply concerns as the EU considers banning Russian oil imports.
- In about a week, WTI futures have risen by about $15 per barrel.
- There's mounting pressure for Saudi Arabia to increase production.
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Crude oil price remains on an uptrend as the market continues to react to geopolitical tensions in eastern Europe. The attack on Saudi Arabia oil facilities has also heightened concerns over the commodity’s supply.
Over a span of one week, WTI futures have risen by about $15 per barrel; trading at $108.11 as at 10:05 a.m GMT. The benchmark for global oil – Brent futures – are at $114.02 after dropping below $100 in the past week.
It’s been close to one month since Russia invaded Ukraine. With the subsequent disruptions in oil supply, $100 has been a major support zone. Interestingly, prior to the Russian attack on Ukraine that began on 24th February, crude oil price had not hit this level since September 2014.
With no end in sight for the ongoing crisis, most analysts have adjusted their short-term forecast to the upside. Indeed, Energy Aspects, Goldman Sachs, and JP Morgan are some of the entities that have presented $150 per barrel as an attainable level in the foreseeable future.
As a reaction to Russia’s attack on Ukraine, the US and Europe imposed sanctions on the east European country. Besides, buyers have shunned the nation’s cargoes while major shipping companies have paused operations in the region.
The EU is now considering a new round of sanctions on the country. Granted, some of its members are opposed to the move as the continent is heavily reliant on Russia’s energy supplies. The EU ban on Russian oil imports would equate to the removal of about 4-5% of the global oil supply. The consideration comes as the US administration warns that Putin’s back is pressed against the wall and that he may result to using chemical weapons.
With the current rallying in crude oil price, there’s mounting pressure on Saudi Arabia to increase production. Notably, the country holds about half of OPEC’s spare capacity. However, on Monday, it stated that it will not be responsible for a decline in oil production if it doesn’t receive help in combating attacks from the Yemen’s Houthi rebels. Some of the cities attacked over the weekend are run by Saudi Aramco – the world’s largest oil company.
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