Jump for oil as Germany prepares for embargo

With strong gains that restored prices above $ 105, oil completed today’s trading, after the publication that stated that Germany no longer opposes the imposition of a European embargo on Russian crude.

In particular, Brent’s June contract expired on $ 107.59 the barrel with rally 2.16% the $ 2.27while at the low of the day he had reached to lose up to 1.6 dollars.

Similarly, the American WTI saw its own June contract jump 3.3% the $ 3.34closing at $ 105.36 the barrel recovering from $ 100.13 where it had been at the day low.

In most trades, the price of crude fluctuated in small fluctuations and mainly with downward trends, which changed when the WSJ reported that representatives of Berlin in the European institutions stated that the country no longer opposes the imposition of an embargo, as long as it is given time to to secure supply from other producers.

The WSJ report came two days after a statement from the country’s vice chancellor and economy minister, Robert Habeck, that Europe’s largest economy hoped to cut off all crude imports from Russia within days.

It is worth noting that before the war in Ukraine, Russian imports covered about 33% of Germany’s oil needs, a month before the German Ministry of Foreign Affairs had stated that they had been reduced to 25% and yesterday spoke of 12%.

As noted again by Again Capital LLC’s John Kilduff, “as a result, oil from the free world will become more expensive and that of the Iron Curtain will lose more value, so it will be traded at a greater discount.”

According to Reuters, citing a document of the Ministry of Economy of Russia, the country’s oil production may decline by up to 17% in 2022.

Despite the expected decline in production, the OPEC + group (which consists of OPEC and allies led by Russia) is not expected to increase production at the upcoming meeting on May 5, sources told Reuters.

Finally, it is worth noting that the current jump in prices came amid a strong rise in the value of the dollar, with the DXY index reaching a high of 20 years today, something that usually works as a deterrent and triggers sales, as crude is priced at US currency.