- Oil prices jumped on Wednesday after European Union (EU) proposed a plan to totally ban Russian oil imports, including cutting out crude within six months and refined products by the end of this year.
- Under the existing contracts Slovakia and Hungary will be granted time until the end of 2023 to enforce the sanctions and cut off ties with Russia.
Oil prices dipped on Friday after surging to their highest value in almost three weeks on the back of fears about an economic slowdown that may further affect the demand for crude oil. Earlier this week, European Union (EU) proposed a plan to totally ban Russian oil imports, including cutting out crude within six months and refined products by the end of this year, in a bid to impose pressure on Russia over Ukraine’s invasion.
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US West Texas Intermediate (WTI) crude dipped 33 cents, or 0.3%, to $107.93 a barrel, whereas Brent futures fell 37 cents, or 0.3%, to $110.53 a barrel by 0015 GMT. This year itself, oil prices have surged more than 40% as the Russia-Ukraine war disrupted flows.
On Wednesday, European Commission President Ursula von der Leyen announced the sixth package of new sanctions on Russia during her speech to the European Parliament, including a total ban on Russian oil imports by the end of 2022, and urged the EU to invest in rebuilding Ukraine.
The total ban on Russian oil will be costly for EU countries as Europe is highly dependent on Russia for oil with around 25% of oil imported from Russia in 2021, far more than any other country, official figures show. Whereas the natural gas from Russia represents about 40% of the EU’s imports.
Britain, which is not part of the EU anymore, has also said that it will phase out Russian energy, whereas other European countries such as Hungary, Slovakia, Finland, and Bulgaria, import around 75% of their oil needs from Russia. These countries might struggle to source their oil in the coming months.
Let us look at 3 FTSE-listed oil stocks that may get impacted by the new sanctions on Russian oil by the EU.
BP Plc (LON: BP.)
The multinational oil and gas company, BP Plc recently announced a US$24 billion hit in profit from its decision to ditch its 19.7% stake in Russian oil giant Rosneft after Russia invaded Ukraine in February. However, its underlying replacement cost profit increased to US$6.2 billion in Q1 2022, from US$2.6 billion a year earlier, driven by exceptional oil and gas trading, higher oil realization, and stronger refining result. The oil giant is also planning another share buyback programme worth US$2.5 billion, with its plan to invest around £18 billion into the UK energy system by 2030.
With a market cap of £81,805.84 million, the FTSE 100 listed company’s share value appreciated by 33.89% over the last one year as of 6 May 2022, while its year-to-date return stands at 29.15%. BP Plc’s shares were trading at GBX 426.70, up by 1.86%, at 12:30 PM (GMT), as of 6 May 2022.
Tullow Oil Plc (LON: TLW)
The multinational oil and gas exploration company, Tullow Oil Plc has an interest in over 50 exploration and production licences located across 11 countries with a primary focus on Europe, Africa, and South America.
With a market cap of £816.67 million, the FTSE 250-listed company’s share value appreciated by 1.98% over the last one year as of 6 May 2022, while its year-to-date return stands at 22.82%. Tullow Oil Plc’s shares were trading at GBX 57.05, up by 0.35%, at 12:30 PM (GMT), as of 6 May 2022.
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Diversified Energy Company Plc (LON: DEC)
The oil and gas production company, Diversified Energy Company Plc has recently announced the acquisition of certain East Texas upstream. With a market cap of £1,041.92 million, the FTSE 250 listed company’s share value appreciated by 4.00% over the last one year as of 6 May 2022, while its year-to-date return stands at 19.14%. Diversified Energy Company Plc’s shares were trading at GBX 124.30, up by 1.47%, at 12:30 PM (GMT), as of 6 May 2022.
Note: The above content constitutes a very preliminary observation or view based on market trends and is of limited scope without any in-depth fundamental valuation or technical analysis. Any interest in stocks or sectors should be thoroughly evaluated taking into consideration the associated risks.