Oil Soars over Possible Supply Crunch from EU’s Plans to Ban Russian Oil

Oil prices surged on Thursday over potential supply woes stemming from the European Union’s proposition listing additional sanctions on Russia, including the prohibition of crude imports from the country in response to its invasion of Ukraine in late February.

As per Reuters, Brent crude futures climbed by 0.8% to $110.99 per barrel by 0638 GMT. The U.S. West Texas Intermediate (WTI) crude futures also rose by 0.6% to $108.46 a barrel.

The EU’s latest plans for the Russian oil embargo requires full support from its 27 nations in order to come into effect, which also involves a phasing out process of existing Russian oil within six months and of refined commodities by the end of this year. Despite that, the EU is faced with the responsibility of securing reliable alternatives since it is significantly dependent on Russia for its oil and gas needs.

RBC Capital Market's Head of Global Commodity Strategy, Helima Croft contended, "The most immediate questions are how many countries will receive exemptions, the scope of the additional sanctions measures to curtail Russian oil exports to other key markets, and President Putin's response to the European action." She added, "We think the price response to such measures will depend on how far they go in making Russia’s 4.8 million bpd (barrels per day) of global exports unavailable as opposed to unpopular."