By Barani Krishnan

Investing.com — The outcome oil bulls had waited weeks for finally seems to be here — a Germany reportedly ready to ban Russian oil — handing the market back to the longs, just ahead of the next OPEC+ meeting where more jawboning could push prices higher.

After the recent uncertainty from China’s Covid problems and related lockdowns, crude got a full green signal on Thursday from a Wall Street Journal report that Berlin was no longer opposed to an embargo on Russian oil — a dynamic that could further tighten supplies in the already-stressed global energy market.

Reuters said that the WSJ article also echoed the comments made by Robert Habeck (German Economy Minister) on Tuesday when he stated that Europe’s biggest economy was capable of handling an EU embargo on Russian Oil Imports. It is hoping to find other ways to replace Russian crude oil.

The WSJ report saw crude oil prices rise to more than $2 a barrel as traders questioned how European countries, which had almost all their oil from Russia, would be able to survive. Germany imported 35% oil from Russia prior to the invasion of Ukraine and subsequent sanctions against Moscow.

Crude, the London-traded benchmark oil price, rose $1.72 or 1.6% to $106.67 per barrel at 1:13 AM ET (17:13 GMT). 

WTI (the New York-traded benchmark U.S. crude oil) rose 1.6% to $106.67/barrel. 

With OPEC+ due to meet in a week, the market could be on an extended recovery from this week’s lows of beneath $100.   

OPEC+, led by the 13-member Saudi-controlled Organization of the Petroleum Exporting Countries and 10 other oil producers steered by Russia, has pushed prices up each time it met over the past year by offering a meager 400,000 barrels per day hike in monthly production — and then not even fulfilling that.

Beyond next week’s OPEC+ meeting, prices could again be under pressure, some analysts said.

“The same factors remain at play here and could be the catalyst for an eventual breakout, be it further Chinese lockdowns, slow output growth from OPEC+, new supply disruptions, larger reserve releases etc,” said Craig Erlam, analyst at online trading platform OANDA. 

“Ultimately, we’re continuing to see consolidation in crude markets, with the range tightening and potentially setting us up for a volatile breakout in the coming weeks.”

“As a result of this, oil from the free world is going to be more expensive, and Iron Curtain oil will plunge further in value and be discounted more heavily,” John Kilduff, partner at Again Capital in New York, said, using a Soviet-era reference for Russian oil.

Adam Button is an analyst at ForexLive and said that politics can further complicate some European countries’ situation. For instance, he said there were plans to supply a  refinery in Gdansk with non-Russian oil but he noted that the refinery in question was owned by Russia’s Rosneft.

“What’s (also) not addressed here is the many other countries in eastern Europe that rely on Russian oil — some of them 100%,” Button said.