By Barani Krishnan

Investing.com – Additional EU sanctions on Russian energy — something oil bulls had been counting on day after day — isn’t coming yet as the West weighs between adding to the laundry list of actions already taken against Vladimir Putin, versus insulating itself against the global energy crisis.

This dithering caused oil prices to drop again Thursday, as Brent global benchmark briefly surpassed U.S. crude for a sub-$100/barrel territory amid worries about the coming onslaught from supply issues.

Adding to the weight on oil was the worst coronavirus outbreak in Shanghai in two years that has forced a more-than-week long lockdown in China’s second largest city, sparking concerns about demand in the No. Number 2 in oil consumption.

“It doesn’t look like the EU will be sanctioning Russian oil anytime soon and that suggests oil will need a couple new catalysts to make a run back towards the recent highs,” said Ed Moya, analyst at online trading platform OANDA.

“The massive crude reserve release plan will provide short-term relief for oil prices but that is also happening as China’s COVID lockdowns are becoming a bigger hit on crude demand.”

After a session low at $98.50, the barrel settled for $100.58, which is 0.5% less,

Brent plunged 13% last week after finishing up 39% in the quarter.

New York’s crude benchmark U.S. oil, WTI was down 20cs (or 0.2%) at $96.03, following an intraday high of $93.86.

WTI fell below $100 support for the week, similar to Brent. This was its lowest week since April 2020. This was despite an impressive 33% rise in the first quarter.

Crude prices plunged for the third day straight after the Paris-based International Energy Agency or IEA announced that 60 million barrels will be released from its member’s reserves to the open market. These numbers are in addition to the 180 million barrels previously announced by the United States.

Over a period of six months, the combined total of 240,000,000 barrels would be added onto the market. This would result in an inflow rate at 1.33 million barrels daily.

It would triple the output of global oil producers who are part of the Russian-controlled OPEC+ alliance, which is a total of 400,000 barrels per month. 

OPEC+ keeps at least four millions barrels of oil daily that are needed for consumers away from the market. This is to make sure that oil prices remain above, or about $100 per barrel. The delivery of 3.0million barrels per day from Russia’s oil exports to the market is also being delayed due to sanctions. However, some of them are being denial.