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08.05.2022 04:34 AM
EU's tough stance pushed oil prices to spectacular growth

During the trading session on Friday, world prices for black gold are permanently increasing and at one point, they have already gained more than 2%. Commodity market participants discussed the possibility of an imminent oil shortage against the backdrop of EU statements and the OPEC + decision.

Thus, the cost of July Brent futures rose by 2.17% to $113.29 per barrel. As a result of trading on Thursday, these contracts increased in price by 0.7% - up to $110.9 per barrel.

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Meanwhile, the price of June futures for WTI crude oil jumped on Friday by 2.12% to $110.56 per barrel. As a result of trading the day before, the cost of these contracts rose by 0.4% to $108.26 per barrel.

The focus of investors on Friday is OPEC+'s announcement yesterday that it will maintain its plan to increase the quota for increasing total oil production next month by 432,000 barrels per day. Despite the permanent increase in quotas from the summer of 2021, the members of the alliance cannot reach the permitted level of oil production. So, according to the results of the past March, this indicator is behind by 1.45 million barrels per day.

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The day before the announcement of the OPEC + decision, European Commission President Ursula von der Leyen announced the sixth package of sanctions against the Russian Federation. According to her, the new package of restrictions provides for the phased introduction of a complete oil embargo within six months. Ursula von der Leyen's statement about drastic measures regarding Russian raw materials instantly pushed oil prices up.

Experts believe that the implementation of the EU plan may provoke an unforeseen reduction in part of the expected supply in the black gold market. At the same time, there is a possibility that Russia will stop supplying oil to the EU countries before the time allotted by the euro region for a step-by-step refusal to import Russian raw materials has expired. Then Europe will be forced to look for alternative sources of black gold as soon as possible.

In addition, the US authorities recently announced plans to purchase oil from the market in order to replenish the strategic reserve. It is expected that soon the Ministry of Energy of the country will start accepting applications from sellers of black gold.

By the way, recently market experts have begun to talk more and more often about the prospects for the risk of secondary US sanctions on oil supplies from Russia. If such restrictive measures are taken, countries purchasing Russian energy resources will face additional difficulties.

If the United States does not take this step, states such as India and China will be able to significantly increase the purchase of oil from the Russian Federation, which will allow the EU countries to turn to other sources of energy.

Analysts warn that, in the event of the termination of Russian oil exports to the states of the eurozone, world prices for black gold will begin to increase significantly.

Irina Maksimova,
Pakar analisis InstaForex
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