Brent Surges to $118 as EU Mulls Fresh Russian Sanctions

April 5, 2022
European Stocks1

By Adedapo Adesanya

The price of the Brent crude rose by 3.59 per cent or $3.44 to $118 per barrel on Monday night as the European Union (EU) considers fresh sanctions that will hit Russia’s energy sector and further tighten the market.

This development also lifted the price of the United States West Texas Intermediate (WTI) crude higher yesterday by 4.36 per cent or $4.39 to $113.6 per barrel.

The new sanctions are being triggered by allegations of the killing of unarmed civilians by Russian forces while retreating from Ukrainian towns. The bloc vowed a new wave of severe sanctions would follow against Russia in a matter of days, including potential sanctions against Russia’s oil, gas, or coal exports.

It admitted that “Haunting images of large numbers of civilian deaths and casualties, as well as the destruction of civilian infrastructures, show the true face of the brutal war of aggression Russia is waging against Ukraine and its people.”

“The massacres in the town of Bucha and other Ukrainian towns will be inscribed in the list of atrocities committed on European soil,” the EU said in a statement on Monday.

“The EU will continue to firmly support Ukraine and will advance, as a matter of urgency, work on further sanctions against Russia. President Putin must stop this war immediately and unconditionally,” the EU added.

Europe to date has ceased to target directly Russian energy exports fearing that sanctions or an embargo could lead to a deep recession in the major European economies, including the biggest one, Germany.

Germany has so far been one of the staunchest opponents of an energy embargo on Russia, but after photos of Russian atrocities in Bucha and other Ukrainian towns emerged, the mood appears to be shifting even in the country.

Now, the EU looks likely to discuss a ban on the import of Russian natural gas this week.

This provides a major shift after crude dropped more than 10 per cent last week after US President Joe Biden announced a record oil reserves release and as International Energy Agency members committed to further tapping reserves.

Mr Biden announced the biggest ever release of oil from the US Strategic Petroleum Reserve (SPR)—180 million barrels over six months which is one million additional barrels on the market per day on average – every day – for the next six months.

Support also came as a pause in talks in Vienna to revive the Iran nuclear deal, which would allow the lifting of sanctions on Iranian oil.

Meanwhile, geopolitical pressure may begin to ease following a truce in Yemen, which could lessen threats to supply in the Middle East.

The United Nations brokered a two-month truce between a Saudi-led coalition and the Houthi group aligned with Iran for the first time in the seven-year conflict.

Saudi oil facilities have come under Houthi attack during the fighting with the recent attack coming last month after they attacked a petroleum products distribution terminal, a natural gas plant, a refinery as well as a water desalination plant, a power station and a gas facility in the kingdom.

Adedapo Adesanya

Adedapo Adesanya is a journalist, polymath, and connoisseur of everything art. When he is not writing, he has his nose buried in one of the many books or articles he has bookmarked or simply listening to good music with a bottle of beer or wine. He supports the greatest club in the world, Manchester United F.C.

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