International oil prices closed higher on Thursday amid fears of a bid as the European Union imposed an embargo on Russian crude as part of the sixth round of sanctions on Moscow’s war on Ukraine.
The stronger US dollar, however, as well as the “crash” of shares, were a factor holding back the rise of black gold.
The global benchmark, Brent oil delivery in July gained 76 cents or 0.7%, closing at $ 110.90 a barrel, while the American WTI crude delivery in June strengthened by 45 cents or 0.4%, closing at $ 108.26 a barrel.
This is the highest closing for US crude since March 25, while for Brent it is the highest level since April 18.
The US dollar has been at its highest level since December 2002, following the Fed’s aggressive rate hike to fight inflation. A strong dollar makes oil more expensive for holders of other currencies.
The EU proposal for sanctions against Russia, which needs unanimity from the 27 member states of the Union, includes the reduction to elimination of imports of Russian refined products from today until the end of 2022, as well as a ban on all transport and insurance services for the transportation of Russian crude.
“The oil market has not sufficiently priced the prospect of a European embargo, so in the summer we should expect higher crude prices, as long as the embargo is legally enforced,” said Rystad Energy’s Bjornar Tonhaugen.
Japan also said it would face serious problems if it had to cut off Russian oil imports immediately.
The member states of the Organization of the Petroleum Exporting Countries, which together with Russia and their other partners make up the wider OPEC + cartel, have agreed to another slight increase in production, once again ignoring calls from Western countries for faster growth. Their production will thus increase in June by 432,000 barrels per day, as planned in the plan prepared for the post-pandemic season.
A U.S. Senate committee is pushing for a bill that could hold OPEC + legally liable for colluding with rising oil prices, paving the way for legal action against the cartel.
Source: Capital
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