Oil Surges as EU Mulls Ban on Russian Crude

By Adedapo Adesanya

Oil prices rallied more than 7 per cent on Monday amid consultations by the European Union (EU) about potentially joining the United States in banning imports of Russian crude.

Brent crude jumped 7.83 per cent or $8.45 to sell at $116.4 per barrel while the US West Texas Intermediate (WTI) moved up by 7.27 per cent or $7.61 to trade at $112.30 per barrel.

The EU may impose an oil embargo on Russia over its invasion of Ukraine. Governments of the bloc will gather this week with US President Joe Biden for a series of summits designed to harden the West’s response to Russia’s aggression against Ukraine.

The US, the United Kingdom, Japan, Canada, Australia and the European Union had unveiled sanctions in various degrees on Russia including a move by Germany to halt certification of an $11 billion Russian gas pipeline.

However, apart from the US, which outrightly banned imports of Russian crude, these did not impact the oil and gas flow as the country is the world’s second-largest crude producer and a major natural gas provider to Europe.

Russia exports roughly 50 per cent of its crude oil to the West and a slowdown in the purchase may make an already tight market become tighter.

France, Ireland, and Lithuania believe that the European bloc should impose more severe sanctions on Russia, including on its energy sector.

EU Minister began consultations on Monday to decide whether and how to step up sanctions against Russian over its invasion of Ukraine.

Oil also gained support after an attack from the Iran-aligned Houthi rebels over the weekend targeted energy facilities in Saudi Arabia, the world’s top oil exporter and de facto leader of the Organisation of the Petroleum Exporting Countries (OPEC).

Drone strikes hit a petroleum products distribution terminal in the southern Jizan region, a natural gas plant and the Yasref refinery in the Red Sea port of Yanbu.

The Saudi-led military coalition that has been battling the Houthis in Yemen for seven years said the weekend assaults had also targeted a water desalination plant in Al-Shaqeeq, a power station in Dhahran al Janub and a gas facility in Khamis Mushait in the kingdom.

Saudi Arabia also said it would not be responsible for any global oil supply shortages after these attacks, in a sign of growing frustration with the way that the US has handled matters relating to Yemen and Iran.