By Adedapo Adesanya
The crude oil market continued its ascent on Thursday on indication that the European Union (EU) may eventually agree to place a ban on Russian oil imports.
During the session, the Brent crude rose by 2.27 per cent or $2.47 to sell at $111.30 per barrel as the United States West Texas Intermediate (WTI) appreciated by 1.89 per cent or $1.97 to trade at $106.2 a barrel.
The market clung to signals that the EU has been seriously mulling sanctions on Russian energy supply since it condemned the killing of unarmed civilians in Bucha by Russian forces while retreating from Ukrainian towns.
Reports emerged that the bloc is moving toward adopting a phased-in ban on Russian oil to give Germany and other countries time to arrange alternative suppliers.
A phased-in ban would force European buyers to seek alternative sources, some of which in the near term are being met by Strategic Petroleum Reserve (SPR) releases.
In the future, more supplies coming out of the ground will be required since a ban on Russian oil could add a deficit of 3 million barrels per day to an already tight market.
While the EU has managed to sanction coal and has committed to weaning itself off Russian oil by the end of the year, it cannot so outrightly ban Russian natural gas since it collectively depends on it for around one-third of its total demand while 25 per cent of crude oil comes from the country.
Europe has been divided on targeting Russian energy exports, with many claiming that an embargo could lead to a deep recession in the major European economies, including the biggest one, Germany, which depends on Russia for half of its gas supplies.
Pressure has been mounting on Russian energy buyers since the country invaded Ukraine, and on Monday, the EU was said to be working on proposals for an embargo.
Russian President Vladimir Putin on Thursday said that Europe doesn’t have a viable immediate replacement for Russia’s natural gas and that attempting to do so would have a huge negative effect on European economies.
Meanwhile, the US Energy Information Administration (EIA) reported on Wednesday that oil stockpiles rose by more than 9 million barrels last week, driven partly by releases from strategic reserves.
However, on the demand side, Chinese refiners are set to cut crude throughput this month by about 6 per cent, a scale last seen in the early days of the COVID-19 pandemic two years ago, to ease bulging fuel inventories during recent lockdowns, industry sources and analysts said.
US oil rigs rose by two to 548 this week, their highest since April 2020, an indication of an increase in oil production.
