Crude oil dips on worries of Russian oil sanctions

Crude oil prices settled lower on Thursday on doubts that the European Union will be able to effectively impose sanctions on Russian energy exports. The prices were also weighted after the world's major oil-consuming countries announced a huge oil release from their strategic reserves.

Josep Borrell, the top diplomat of the European Union told in a NATO meeting that the new EU measures could be passed on Thursday or Friday with an oil embargo to be discussed next. Mr Borrell also told that the coal ban would take full effect from mid-August, a month later than initially planned.

Additionally, members of the International Energy Agency (IEA) decide to release 120 million barrels from strategic reserves to quell price gains. This will include 60 million barrels from the US alone as a part of the country's previous announcement to release 180 million barrels.

Crude oil prices have been volatile lately as the potential for more sanctions on the Russian energy sector from European countries following higher deaths in Ukraine has ignited supply concerns among investors.

Oil prices were also pressurised by lower demand in China, one of the leading oil consumers in the world amid a new wave of COVID-19 in the country.

The prices of Brent Crude oil settled at US$100.58/bbl, down 0.5% and WTI Crude oil closed 0.6% down at US$96.03/bbl.

Also Read: Crude oil surges to 14-year highs on delays in Iranian talks

Source: © Lancemichaels | Megapixl.com

On Friday, June delivery Brent Crude oil futures inched lower and last traded at US$100.46 per barrel down 0.12%, while May delivery WTI crude oil futures exchanged hands at US$96.12 per barrel, up 0.09% at 12:16 PM AEDT.

Huge release from IEA

On Wednesday, IEA member countries agreed to release 60 million barrels. Furthermore, Japan will also release 15 million barrels of oil from state and private reserves. Analysts across the globe see the release of the stocks as a big relief amid concerns over market tightness.

Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars

In total, 19 countries made commitments to release 120 million barrels in the next six months to cool down the boiling prices of crude oil.

Also Read: Crude oil slides from multi-year highs as Iran talks rev up

Bottom Line

Crude oil prices tumbled significantly on Thursday on worries that the European Union will be able to effectively impose sanctions on Russian energy exports. The prices were further pressurised by weak demand in China and IEA’s mega-scale crude oil release plan.

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