France expects EU consensus on Russian oil ban by end ofweek
OPEC+ set to stick to modest oil output rises amid pricerally
Rising oil prices buy Iran time in nuclear talks,officials say
LONDON: Oil prices extended gains on Thursday on supply concerns after the European Union laid out plans for new sanctions against Russia, including an embargo on crude in six months, offsetting concerns over weaker Chinesedemand.
Brent was up 36 cents, or 0.3%, at $110.50 a barrel by 0825 GMT, and U.S. West Texas Intermediate crude rose11 cents, or 0.1%, to $107.92 a barrel.
Both benchmarks gained more than $5 a barrel on Wednesday.
The sanctions proposal, which needs unanimous backing by the27 EU countries, also includes phasing out imports of Russianrefined products by the end of 2022, and a ban on all shippingand insurance services for the transportation of Russian oil.
“The oil market has not fully priced in the potential of anEU oil embargo, so higher crude prices are to be expected in thesummer months if it’s voted into law,” said Rystad Energy’s headof oil markets research, Bjørnar Tonhaugen.
The French environment and energy minister, Barbara Pompili,said she was confident European Union member states will reach aconsensus on sanctions by the end of this week.
“The planned EU oil embargo represents a massive logisticalchallenge for oil markets,” said Investec’s head of commodities,Callum Macpherson.
“Re-routing Russian output from Europe to willing buyers inAsia, in the presence of sanctions, is already so challengingthat even Russia has admitted its production will declinesignificantly,” he added.
Meanwhile, in its meeting on Thursday, the Organization ofthe Petroleum Exporting Countries and allied producers, known asOPEC+, will likely stick to modest oil output increases arguingit is not responsible for geopolitics and supply disruptions.
OPEC Secretary General Mohammad Barkindo reiterated it wasnot possible for other producers to replace Russian supply, butexpressed concerns about slowing demand for transportation fuelsand petrochemicals in the world’s top importer, China, becauseof prolonged COVID-19 lockdowns.
A private-sector survey on Thursday showed China’s servicessector activity contracted at the second-steepest rate on recordin April under the effect of pandemic measures.
In Iran, surging oil prices have given its energy-relianteconomy a breather and hence its clerical rulers are in no rushto revive a 2015 nuclear pact with world powers to easesanctions, three officials familiar with Tehran’s thinking said.
In the United States, crude stocks were up 1.2 millionbarrels last week after more oil was released from strategicreserves, according to the Energy Information Administration.(Reporting by Bozorgmehr Sharafedin in London, additionalreporting by Florence Tan in Singapore and Stephanie Kelly inNew York; Editing by Richard Pullin, Bradley Perrett, LincolnFeast and Kim Coghill)
