HOUSTON: Oil prices settled up more than 7% yesterday, with global benchmark Brent climbing above US$115 (RM483) a barrel, as European Union (EU) nations disagreed on whether to join the United States in a Russian oil embargo after an attack on Saudi oil facilities.
Brent futures settled at US$115.62 per barrel, up US$7.69 or 7.12%, while US West Texas Intermediate crude futures settled at US$112.12 per barrel, up US$7.42 or 7.09%.
The EU foreign ministers disagreed on whether and how to slap sanctions on Russia's lucrative energy sector over its invasion of Ukraine, with Germany saying the bloc was too dependent on Russian oil to decide an embargo.
The EU and allies have already imposed hefty measures against Russia, including freezing its central bank's assets.
Russia's siege and bombardment of Mariupol port, which EU foreign policy chief Josep Borrell called “a massive war crime”, is increasing pressure for action.
But targeting Russian energy exports, as the US and Britain have done, is a divisive choice for the 27-nation EU, which relies on Russia for 40% of its gas.
Some of those who want the EU to go further showed impatience at the pace of talks after a meeting of EU foreign ministers in Brussels.
“Why should Europe give Putin more time to earn more money from oil and gas? More time to use European ports? More time to use unsanctioned Russian banks in Europe? Time to pull the plug,” Lithuania’s Foreign Minister Gabrielius Landsbergis said on Twitter.
But Borrell told a news conference that while that the bloc would “continue isolating Russia”, concrete decisions would be made later.
Germany and the Netherlands said the EU was dependent on Russian oil and gas and could not cut itself off right now.
“The question of an oil embargo is not a question of whether we want or don't want (it), but a question of how much we depend on oil,” German Foreign Minister Annalena Baerbock told reporters.
“Germany is importing a lot (of Russian oil), but there are also other member states who can't stop the oil imports from one day to the other,” she said, adding that the bloc should instead work on reducing its reliance on Moscow for its energy needs.
Such an embargo “could be the precipice for global trouble supply-wise,” said John Kilduff, a partner at Again Capital LLC.
Given the uncertainty about the EU's potential ban of Russian petroleum imports, US petrol futures jumped 5%.
EU governments will consider whether to impose an oil embargo on Russia over its invasion of Ukraine as they gather this week with US President Joe Biden for a series of summits designed to harden the West's response to Moscow.
The EU and allies have already imposed a panoply of measures against Russia, including freezing its central bank's assets.
With little sign of the conflict easing, the focus returned to whether the market would be able to replace Russian barrels hit by sanctions.
“Optimism is seeping away about progress in talks to achieve a ceasefire in Ukraine and that’s sent the price of oil on the march upwards,” Susannah Streeter, senior markets analyst at UK-based asset manager Hargreaves Lansdown, said.
Over the weekend, attacks by Yemen's Iran-aligned Houthi group caused a temporary drop in output at a Saudi Aramco refinery joint venture in Yanbu, feeding concern in a jittery oil products market, where Russia is a major supplier and global inventories are at multi-year lows.
Saudi Arabia yesterday said it would not be responsible for any global oil supply shortages after these attacks, in a sign of growing Saudi frustration with Washington's handling of Yemen and Iran.
The latest report from the Organization of the Petroleum Exporting Countries and allies including Russia, together known as Opec+, showed some producers are still falling short of their agreed supply quotas.
Oil prices were also sensitive to talk of Hong Kong lifting Covid-19 restrictions, which could increase demand, and to the growing list of US companies retreating from Russia – including Baker Hughes, ExxonMobil, Shell , and BP. – Reuters