Possibility of EU phasing out Russian crude sends oil up
Oil prices went up for the third day in a row in the wake of the EU’s plans for a potential phase-out of Russian crude.
A barrel of European reference crude Brent costs USD 111.57 Friday morning against USD 111.18 Thursday afternoon. Meanwhile, US counterpart West Texas Intermediate trades at the same time for USD 108.98 against USD 108.49 Thursday afternoon.
The EU plans to phase out purchases of Russian crude within six months and refined oil products by the end of 2022. EU’s role as offtaker of crude is big enough that the phase-out of Russian crude could send oil prices higher despite dubious prospects on the supply side generally.
”There are concerns over global growth and what it could mean for oil demand,” says head of commodities research at ING Warren Pattersen to Reuters.
The growth concerns follow on the heels of high inflation, which has prompted central banks to raise interests to curb demand and exert pressure on prices.
At the same time, the Organization of Petroleum Exporting Countries and allies in OPEC+ decided to raise output in June by 432,000 barrels per day. This increase falls slightly below the desired output level of several Western nations.
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