(Bloomberg). Oil closed a volatile session lower after a stronger U.S. Dollar offset potential bullish effects from U.S. plans to implement new sanctions against Russia by the European Union, U.S. and Group of Seven countries. 

West Texas Intermediate declined 1.3% and closed below $102/barrel. The dollar rose after remarks by the Federal Reserve Governor Lael Brainard that the nation’s central bank would continue to tighten policy methodically and shrink its balance sheet at a rapid pace as soon as May. A stronger dollar means that commodities are less desirable if they are priced in dollars. This is contrary to the U.S. EU’s and G-7 nations plans to put more sanctions on Russian financial institutions as well as state-owned companies. All new Russian investments would be subject to restrictions. 

The “U.S. dollar strength likely contributed to late day sell-off,” in the oil market, said Ryan Fitzmaurice, a commodities strategist at Rabobank.  

U.S. Oil Futures briefly fell below $100/barrel in post-closed trades

Oil rallied to the highest level since 2008 in the first quarter as Russia’s invasion disrupted supplies in an already tight market faced with roaring demand and dwindling stockpiles. U.S., U.K. had already banned Russian oil. Increasing civilian casualties in Ukraine have increased pressure on government to move against Russia.

Ursula Von Der Leyen, President of the European Commission, stated earlier that trade bloc members were working to implement additional measures including sanctions against oil imports. Germany’s foreign affairs minister said the bloc will exit Russian fossil fuels, starting with coal. 

“The threat of European sanctions on Russian oil remains an upside risk for crude prices despite the firm opposition in the short term from certain member states,” said Craig Erlam, senior market analyst at Oanda. 

Check out: EU proposes banning Russian Coal imports following atrocities

Russia has been accused of committing massacres against civilians in Bucha as part of the conflict in Ukraine. Moscow strongly denies this claim. 

New curbs are possible, but this is offset by the massive release of U.S. Strategic Petroleum Reserves, (SPR), that began in May in a bid for taming prices. Other countries have said they’ll also make drawdowns. This has changed the shape of the oil futures curve. It keeps prices in check but lifts them further into the future. 

“Many who were long oil got out in the last week or so on the basis that the SPR was just too much for the market to handle without some real evidence of dropping Russian crude exports,” said Scott Shelton, an energy specialist at TP ICAP (LON:) Group Plc.

Saudi Arabia has raised the selling price for all its regions in a sign of tightening. Saudi Aramco (SE:) increased its Arab Light crude for next month’s shipments to Asia to $9.35 a barrel above the benchmark it uses, a record differential.

Many Western companies aren’t taking Russian crude, although discounted exports are going to buyers in Asia, including China and India. On Monday, commodity trader Trafigura Group offered to sell a cargo of Russia’s Urals grade at a record discount, but there were no bids.

According to the American Petroleum Institute (funded by industry), stocks increased by 1.08 million barrels last week. The group also estimates that gasoline inventories fell by more than half of a million barrels while distillates increased by nearly 600,000. 

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