By Adedapo Adesanya
Brent crude continued its ascent on Friday as it traded at $109.3 per barrel after appreciating by 1.63 per cent or $1.75 as fears over Russian supply disruption outweighed COVID-19 lockdowns in China, the world’s biggest crude importer.
However, it was a different outcome for the United States West Texas Intermediate (WTI) crude, which dropped 92 cents or 0.88 per cent to trade at $104.4 per barrel.
There is an increased likelihood that Germany will join other European Union (EU) member states to place an embargo on Russian oil, in a move that would lay to rest a point of contention among its members.
Discussions have been ongoing for weeks with the United States piling pressure on the group to do its part to stop funding Russia with its payments for oil and gas supplies.
The European Commission is reportedly set to draft the finalized proposal to submit it to EU ambassadors for approval. Those ambassadors are scheduled to meet next Wednesday, with final approval set to be delivered by the end of the week.
There is no indication of how inclusive or complete an embargo would be but it is clear that in some type of way, there will be some level of ban.
Analysts note that if Russia fails to find an outlet for all of its crude oil in the wake of a possible crude oil embargo from the bloc, Russia could be forced to slash production—production that may be unable to come back online.
This may coincide with the Organisation of the Petroleum Exporting Countries and its allies, OPEC+ sticking to its existing deal and agreeing on another small output increase for June when it meets on May 5.
Already, sanctions on shipping have made it increasingly difficult for Russian ships to send oil to customers, prompting Exxon Mobil Corp to declare force majeure for its Sakhalin-1 operations and curtail output.
However, China showed no signs of easing lockdown measures despite the impact on its economy and global supply chains.
Residents were reported to have been banging pans and shouting from the windows of their homes, to protest against the government enforced lockdown in Shanghai, its financial hub.
The Chinese government has been pursuing a zero-Covid strategy since the beginning of the pandemic, with the aim of keeping the country entirely COVID-19 free.
