Workers walk while oil pumps are seen in the background at the Uzen oil and gas field in the Mangistau region of Kazakhstan, November 13, 2021. REUTERS / Pavel Mikheev
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- Cruel growth after almost 10% decline in two days
- Hungary intervenes in EU embargo on Russian oil
- Ukraine stops some Russian gas flows
- Big increase in crude oil inventories in the United States, decline in gasoline
NEW YORK, May 11 (Reuters) – Oil prices rose more than 5 percent on Wednesday after Russian gas flows to Europe fell and Russia sanctioned some European gas companies, exacerbating uncertainty in global energy markets.
Oil and gas prices have risen since Moscow invaded Ukraine in February, and the United States and its allies have since imposed heavy sanctions on Russia. Crude oil trade has been restricted, and Russia has threatened to cut off gas supplies to Europe, although it has given up.
Russian gas flows to Europe through Ukraine fell by a quarter after Kyiv stopped using a major transit route, blaming Russian intervention. This was the first time that exports through Ukraine were suspended after the invasion. Read more
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This move has raised fears that such disruptions may follow, even as prices rise. Russia on Wednesday sanctioned 31 companies based in countries that imposed sanctions on Moscow after Russia invaded Ukraine in February. Read more
Brent crude rose $ 5.05, or 4.9 percent, to $ 107.51 a barrel, while US West Texas Intermediate crude rose $ 5.95 a barrel to $ 105.71. an increase of 6%.
The European Union has threatened a full embargo on Russian oil, although negotiations are ongoing. Due to Russia’s role as the world’s largest exporter of crude oil and fuels, the disruptions – which are expected to worsen – have led to a tightening of markets around the world, especially for refined products such as diesel.
“Prices will continue to rise, especially if the European Union reaches an agreement to phase out Russian oil purchases for the rest of this year,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
The EU is still bargaining for an embargo on Russian oil, which analysts say will further tighten the market and change trade flows. The vote needed unanimous support, but was postponed as Hungary plunged into opposition. Read more
The latest data on US stocks highlighted the upward trend in prices. Although crude oil inventories in the United States rose by more than 8 million barrels – largely due to another release of strategic reserves – gasoline inventories fell by 3.6 million barrels and distillate inventories also fell.
Refining capacity has declined in the United States and the nation has increased exports to meet demand from overseas buyers. So far in 2022, the United States has exported approximately 4 million barrels of fuel per day.
“90% utilization figures are not what they used to be because overall capacity is declining,” said Tony Hedrick, an energy market analyst at CHS Hedging. “We see that refineries are not able to cope with the demand for petrol.”
Crude oil prices rose in 2022 as Russia’s invasion of Ukraine heightened supply concerns, with Brent reaching $ 139, the highest level since 2008, in March. Concerns about growth caused by COVID restrictions in China and rising US interest rates sparked a decline this week.
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Additional reports by Alex Lawler in London, Laura Sanicola and Arati Somasehar in New York; edited by Jason Neely, Louise Havens, Tomasz Janowski and David Gregorio
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