Brent oil: US and UK embargoes on Russian oil fuel Brent wave

(BFM Bourse) – After a brief lull, oil prices are soaring as the Biden administration prepares to announce an embargo on Russian oil, according to information from Bloomberg. The UK should do the same.

If at this stage the European Union still excludes imports of fossil fuels, which on Monday the German Chancellor Olaf Scholz described as essential to the everyday lives of citizens in Europe, the United States and the United Kingdom, at this stage without Russian oil and gas, were less dependent, they would be about to declare an embargo.

This information, relayed by the economic and financial bureau Bloomberg, shook world oil markets again on Wednesday. Shortly after 4 p.m., a barrel of Brent was up 7.6% to $132.5 as the North American benchmark, WTI, traded at $128.6 a barrel, up 7.8% from the previous day. . These two benchmarks rose slightly in the morning and significantly boosted profits in response to rumors of an embargo by the Americans and the British.

Joe Biden breaks unity on the Western Front for the first time in terms of sanctions against Russia, announcing a ban on imports into the United States of Russian oil and gas on Tuesday. The US president, who has been under intense political pressure to make this decision, has pushed his agenda forward and will speak at 4:45 p.m. (Paris time) to “announce actions aimed at imposing sanctions on Russia for its unjustified actions.” and unprovoked war” against Ukraine, the White House said. This will be according to several US media outlets including Bloomberg to announce a ban on the import of Russian hydrocarbons.

Crucial to the European economy (40% of natural gas needs and about 30% of oil needs), Russia’s hydrocarbon reserves, on the other hand, represent only 8% of US imports of crude oil and petroleum products. The United States does not import gas from Russia. “Concern about such an announcement is pushing prices up,” said City Index analyst Fiona Cincotta, pointing out that it “fuels fears of inflation.” Exporter from the second world: “Russia is not a producer whose extractions can easily be compensated by others,” emphasizes Giovanni Staunovo, analyst at UBS.

However, most buyers already avoided buying as much Russian oil as possible: “They all remember the sanctions suffered by European companies that traded with Iran while this country was subject to sanctions,” explains Benjamin Louvet, commodity manager at OFI Asset Management, from. Of the oil giants, only Shell dared to buy Russian oil last week… before announcing Monday it regretted this decision and adding that it would not be taken back. The Anglo-Dutch “super major” has since announced a withdrawal from Russian oil and gas, as well as the closure of its gas stations and the cessation of its aviation fuel and lubricants business in Russia.

Also according to press reports, the United Kingdom should follow in the footsteps of the United States and also impose an embargo on Russian hydrocarbons on Tuesday.

On the Brussels side, the European Union, for its part, presented on Tuesday solutions to cushion the impact of the current rise in energy prices and cut Russian gas imports from the EU by two-thirds from this year – ahead of a summit on Thursday and Friday, where the twenty-seven who will meet in Versailles must band together to “get out of dependence on Russian hydrocarbons”.

Quentin Soubranne – ©2022 BFM Bourse