Proposal on new EU sanctions against Russia send oil prices soaring
Oil prices continue to climb Thursday as a result of a proposal by the EU on further sanctions against Russia. The proposed sanctions include an embargo on Russian oil, writes Reuters.
A barrel of European reference crude, Brent, costs USD 110.54 Thursday morning against USD 108.88 Wednesday afternoon. US benchmark West Texas Intermediate trade concurrently at USD 108.01 against USD 106.33 Wednesday afternoon.
Wednesday, European Commission President Ursula von der Leyen presented a proposal for new sanctions against Russia, which included an intention to phase out Russia crude. Specifically, the proposal involves an embargo on Russian crude, which will come into effect in six months, as well as a phase-out of all refined oil products before the end of 2022. On top of this comes a stop to all shipping, brokerage, insurance and financial services, which EU companies are behind, in connection with transportation of Russian oil.
For the sanctions to come into effect, it requires a unanimous vote byte all 27 EU nations. Among them, especially the eastern EU nations are worried that the proposal doesn’t leave enough time to adapt to the sanctions.
”We think the price response to such measures will depend on how far they go in making Russia’s 4.8 million bpd (barrels per day) of global exports unavailable. The most immediate questions are how many countries will receive exemptions, the scope of the additional sanctions measures to curtail Russian oil exports to other key markets,” notes head of global commodity strategy at RBC Capital Market Halima Croft to Reuters.
The Organization of Petroleum Exporting Countries and allies in OPEC+ are expected to content to raising output, thereby sitcking to the plan for monthly ramp-up of oil production.
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