Oil Up Over More Potential Sanctions on Russian Supply, Tight Market -Breaking
By Gina Lee
Investing.com – Oil was up on Tuesday morning in Asia, reversing its losses from the day before. Investors consider the possibility of additional sanctions against Russia’s energy sector, and then digest the fact that Russia would not be able to replenish its supply.
The price of crude oil WTI futures rose 1.96% to $96.14 by 12:00 AM ET.
WTI and Brent contracts fell around 4% Monday, as COVID-19 lockdowns by China fueled fuel demand concerns. The International Energy Agency also prepares an enormous oil reserve release.
Over the next six-months, the organization will release approximately 240,000,000 barrels. 180 million of these million will come from U.S. stockspiles. The rate at which they are releasing them is one million barrels per day starting May 2022.
According to foreign ministers, the European Union has also begun to draft proposals to impose a bloc-wide oil embargo against Russia as a response to Russia’s invasion of Ukraine on February 24. But, it is not clear if the Russian crude oil supplies will be included in this ban.
Edward Moya (OANDA senior market analyst) stated that “the oil market remains vulnerable to a significant shock if Russian Energy is sanctioned. And that risk continues to be on the table.”
Note added that “Oil prices are going to play tug of war as long crude inventories stay low.” However, traders in energy will have a hard time ignoring the constant announcements by China regarding new COVID restrictions.
OPEC has warned that Russian oil and other liquids export losses could reach up to 7 million barrels per daily due to the existing sanctions. It added that the volume will be “impossible” to replace.
Investors are now awaiting oil supply by the American Petroleum Institute (due later in the morning).