China Claims Oil Falls Amid Uncertainty Over Russia Sanctions

A gas pump hangs from the ceiling at a gas station in Seoul, June 27, 2011. REUTERS/Joo Young-hak/File Photo

(Reuters) – Oil prices fell $2 after rising earlier in the session on Thursday amid uncertainty that the euro zone will be able to impose effective sanctions on Russia’s energy exports, and after consuming countries announced the release of huge amounts of oil from emergency reserves. .

Brent crude futures fell to $2.13, or 2.1%, at $98.94 a barrel at 12:05 pm ET (1405 GMT), while US West Texas Intermediate crude fell $1.7, or 1.9%, to $94.36 a barrel. .

Both benchmarks fell more than 5% in the previous session and reached their lowest closing levels since March 16.

The EU’s top diplomat, Josep Borrell, said at a NATO meeting on Thursday that new EU measures, including a ban on Russian coal, could be passed on Thursday or Friday, and the bloc would discuss an oil embargo next time. Read more

However, the coal ban will take effect in full from mid-August, a month later than initially planned.

“Nobody wants to bite the bullet and impose sanctions on Russian energy, which has been supporting the market,” said Bob Yoger, director of energy futures at Mizuho.

Prices were also pressured by concerns that the shutdown in China due to a new wave of the coronavirus pandemic could hamper the recovery of oil demand.

Repeated COVID-19 outbreaks have led to widespread lockdowns in Shanghai, China’s most populous city.

“The demand situation in China doesn’t look really good, especially when we have a lot of new supply in the market,” said John Kilduff, partner at Again Capital LLC in New York.

International Energy Agency member states agreed on Wednesday to release 60 million barrels on top of the 180 million barrels the United States announced last week to help bring prices down amid supply concerns in the wake of Russia’s invasion of Ukraine. Read more

Japan will release 15 million barrels of oil from state and private reserves as part of the move, Kyodo News reported Thursday. Read more

“Although this is the largest issuance since the creation of the stockpile in 1980, it will ultimately fail to change the fundamentals in the oil market,” ANZ Bank said of the US issuance.

ANZ argued that the release would likely delay further increases in production from major producers and could give OPEC+ more breathing space amid calls for more output to be raised.

However, other analysts see the stock release as a huge relief amid concerns about a tightening market.

“In light of these volumes, previous concerns about supply shortages are no longer justified, as can also be seen from the price trend,” Commerzbank said, noting that Brent crude prices have fallen by about $12 since the first announcement of a US release. last week.

Additional Ahmed Ghaddar from London, Reported by Sonali Paul from Melbourne and Muyu Shu in Beijing; Editing by Jean Harvey and Bernadette Baum

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