Oil prices rally on report that Germany drops opposition to Russian oil embargo
Oil prices gathered on Thursday after the report that Germany no longer opposed the Russian oil embargo, which could then tighten supplies in the global crude oil market that had been emphasized.German representatives for the European Union no longer reject the full Russian oil embargo during Berlin given time to secure alternative supplies, The Wall Street Journal reported on Thursday.
The article echoed a comment from German Economic Minister Robert Habeck on Tuesday, when he said the biggest economy of the European Union could overcome the EU embargo about Russian oil imports and hoped to find a way to replace Russian oil with other supplies.Brent Crude Futures rose 2.2% to $ 107.59 per barrel. The Texas West Texas US intermediary settled 3.3% higher at $ 105.36 per barrel.
Germany is very dependent on the import of Russian energy and previously opposed the full ban.Before the war in Ukraine, Russian oil contributed about one third of the German supply. A month ago, the German Minister of Economy said that Germany had reduced its dependence on Russian oil to 25% of its imports.”As a result, oil from the free world will become more expensive, and iron curtain oil will plunge further in value and more discounted,” said John Kilduff, a partner at LLC Capital in New York.Russia has begun to use energy exports as a mace following a response by the United States and allies to the Moscow invasion to Ukraine.
Russia has cut the supply of gas to Poland and Bulgaria and tried to encourage the EU to adopt its new gas payment system involving an account opening in Gazprombank where payments in the euro or dollars will be converted into rubles.Russian oil production could drop by 17% in 2022, according to the Ministry of Economy documents seen by Reuters, as debated by the country with Western sanctions.
Apart from this expected deficiency, the OPEC+ producer group consisting of the organizational of oil and allied exporters led by Russia is expected to maintain a simple rate of increasing output when meeting on May 5, Sumber told Reuters.The US dollar jumped to the highest level in two decades on Thursday, driven by weaknesses in its main rivals, such as Yen and Euro. A stronger dollar usually bearish for the price of oil valued in Greenback, because it makes it more expensive for other currency holders.
In China, Beijing closed several public spaces and increased Covid-19 checks to others because most of the 22 million city residents began more mass testing in an effort to avoid locking such as Shanghai. The latest locking has disrupted the factory and supply chain, increasing concerns over the country’s economic growth. But the largest oil rectors in Asia, Sinopec Corp, expect state demand for processed oil products to recover in the second quarter because the Covid-19 outbreak is gradually controlled.The slowdown in global growth due to higher commodity prices and escalation in Russian-Ukraine conflicts can further worsen the concern of oil demand.
