BAKU, Azerbaijan, May 7. With or without a formal embargo, though, Russia’s crude oil exports to the EU will collapse this year, Trend reports with reference to Capital Economics, a UK-based research and consulting company.
“Oil prices rose as the EU proposed to end imports of Russian crude oil and petroleum products by end-2022. Russia’s crude oil exports were strong in April, but there are signs of a downturn in the last week or so. Elsewhere, there continues to be no sign that OPEC+ will ramp up exports. The group agreed this week to stick to its original plan to gradually unwind pandemic-related output cuts,” said the company.
Energy prices continue to be pummelled by upward pressure related to fears of supply shortages and downward pressure from signs of slower economic growth, tighter monetary policy and a stronger US dollar. This week was no exception, although supply fears dominated, and prices rose as the EU proposed a ban on Russian oil imports by end-year.
“Admittedly, unanimous approval by member states is proving difficult but, even without a co-ordinated response, we expect Europe’s oil imports from Russia to plunge. This will involve a scramble to find alternative suppliers, which is a key reason why we expect prices to remain high this year. What’s more, if the EU bans any EU involvement in the transportation of Russian oil, as was proposed, then this could potentially send prices even higher than we expect,” Capital Economics said in its latest report.
The company believes that turning to next week, progress on the EU’s oil embargo plans will remain a key driver of prices, but there may be some scope for demand-related news to take the upper hand.
“China’s April trade data on Monday are likely to show a further fall in commodity imports given the virus-related downturn in economic activity, which could weigh on prices. By contrast, new infections are falling at the national level which, if it continues, may spark optimism about a recovery in China’s commodities demand and give a lift to prices, particularly industrial metals, later in the week.”
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