Choose country & language:

WTI rises as Europe prepares to ban Russian oil imports

Home >  Daily Market Digest >  WTI rises as Europe prepares to ban Russian oil imports

Written by:
Myrsini Giannouli

05 May 2022
Share the article

Oil prices rallied last week, rising above the key $100 per barrel level, and remained strong on Wednesday, with WTI trading above $108 per barrel, rising past the $106.4 per barrel resistance. If the WTI price drops, support can be found at the $94.5 per barrel level and further down at the $90 per barrel level, while resistance can be found near $118.3 per barrel. 

Oil prices are especially volatile, as competing factors affect oil supply and demand. Stalling global economic growth and lockdowns in China dampen demand. Covid restrictions in China have raised fears of a large decrease in global oil demands. China is the largest importer of crude oil and the strict Covid lockdowns had been reducing global oil demand. The large economic hub in Shanghai has been in a zero-Covid lockdown for weeks now. China’s capital city of Beijing is not under zero-Covid lockdown yet, but has strict Covid restrictions in place, limiting oil demand.

The crisis between Russia and Ukraine however, has been intensifying concerns of disruptions in oil distribution, supporting oil prices. Continued Russian hostilities against Ukraine provide support for the price of oil, as western allies discuss fresh sanctions on Russia, while the Russian President, Vladimir Putin, cut off the gas supply to Poland and Bulgaria, intensifying fears of an energy crisis in Europe. 

The US has already banned all oil and gas imports from Russia, with as many as 3 million barrels per day of Russian crude oil potentially removed from the market as a result of sanctions and of boycotting of Russian oil. 

The EU has been hesitant to enforce an embargo on Russian oil, as many of its member states, especially Germany, depend heavily on Russian oil imports. The EU is expected to enforce fresh sanctions on Russia within the next few days and it is reported that the Eurozone will enforce a direct embargo on Russian oil imports for the first time. Reports that Germany has dropped its opposition against the embargo have been pushing up oil prices within the last few days, as such a move will create an energy shortage in Europe. 

The new package of Russian sanctions is being drafted and will likely be distributed among Eurozone members on Wednesday. It is likely, however, that the new sanctions will not signal an abrupt cutting off of Russian oil, as most EU member states are in favor of gradually weaning off Russian oil imports. On Wednesday however, reports surfaced that in one month, the European Commission would ban all shipping, brokerage, insurance, and financing servers related to the import and transport of Russian oil. The reports are as yet unconfirmed by official sources but have pushed oil prices up.

On Thursday, all eyes are going to be on the next Ministerial OPEC+ meeting. Strong volatility in the price of oil is expected after the event, depending on its outcome. Increased supply concerns, combined with high demand, may encourage OPEC and its allies to increase its current output goal. 

WTI 1hr chart

TRADE WTI

The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.

Written by:
Myrsini Giannouli

Share the article:

Latest news

Euro gains strength as ECB moves in a more hawkish direction

Myrsini Giannouli 20 May 2022

Gold prices are on the rise as risk-aversion sentiment grows

Myrsini Giannouli 20 May 2022

Oil prices rebound as the end of the Shanghai lockdown insight

Myrsini Giannouli 20 May 2022

Cryptocurrency prices reflect stock market volatility

Myrsini Giannouli 20 May 2022

Why TopFX

10-years

10-years

industry presence
as a Liquidity Provider

Spreads

Spreads
from 0.0 pips

and reliable execution

Segregated

Segregated

client funds

First-class

First-class

customer support

Open your Live Account in 3 Steps

Step 1

Fill in the registration
form and click
"Create account".

Step 2

Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.

Step 3

When your live account is approved, you can deposit funds and start trading on your chosen platform!