Oil falls as Europe refrains from banning imports of Russian crude

(Bloomberg) – Oil fell as the European Union balked at banning imports of Russian crude, while Kazakhstan said disruptions at a key export terminal were expected to ease.

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New York futures fell 3.3%, trading in the $4 range on Friday. Markets sold off after the EU and the United States announced an agreement to reduce dependence on Russian natural gas, although several countries remained uneasy with any potential oil embargo on a major supplier. Meanwhile, loading of crude oil from Kazakhstan’s Caspian Pipeline Consortium link has partially resumed.

Oil is still up this week and has rallied over the past four months, hitting its highest level since 2008 in early March as the war in Ukraine rattled already strained commodity markets. In response, the US and UK moved to ban Russian oil, and many Western energy companies are also choosing to avoid domestic crude. Buyers in China and India seem to be taking in some of those barrels.

“The oil market is exhausted,” said Ed Moya, senior market analyst at Oanda. “Everyone wants to have a better idea of ​​what’s going to be next” and “traders don’t want to engage too long until we see new geopolitical developments.”

The global oil market has been thrown into turmoil by Russia’s invasion of Ukraine, the United States and Europe imposing sanctions on Moscow and crude buyers avoiding shipments from the country. Trafigura Group predicted this week that crude prices should continue to rise, potentially hitting $150 a barrel. Initial margins, the collateral that clearinghouses require investors to manage risk, also jumped, raising trading costs and compounding the pushback for traders.

EU industrial power Germany has said it plans to wean itself off Russian fossil fuels quickly, while warning that an immediate embargo is not possible because of the damage it would cause to the largest economy in Europe. Austria also said it would not accept a ban on Russian oil and gas.

The CPC export terminal halted cargo loadings earlier this week after moorings suffered major damage in inclement weather. Kazakh Energy Minister Bolat Akchulakov said on Friday that one of the moorings would resume operations shortly, while two others are expected to resume in three weeks.

Oil markets remain retrograde, an uptrend marked by higher prices for barrels in the short term than those in the longer term. Brent’s rapid spread – the difference between its two closest contracts – was $3.25 a barrel on Friday, down from 41 cents at the start of the year.

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Mary I. Bruner