Economy

Oil settles lower on blurry supply outlook ahead of plan to ban Russian oil

China's pandemic restrictions, Saudi Arabia's decision to sell oil prices lower for Asian and European clients contribute to demand woes

Sibel Morrow   | 09.05.2022
Oil settles lower on blurry supply outlook ahead of plan to ban Russian oil

ANKARA

Oil prices edged lower on Monday in the wake of demand uncertainties, with sustained COVID-19 restrictions in China and some supply concerns alleviated from Saudi Arabia's move to lower the price of its Arab Light crude grade to Asia and Europe for June.

International benchmark Brent crude cost $111.85 per barrel at 0643 GMT for a 0.48% decrease after closing the previous session at $112.39 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $109.13 per barrel at the same time for a 0.58% loss after the previous session closed at $109.77 a barrel.

Nonetheless, prices are still under pressure from supply concerns in Europe, as EU countries in talks last week agreed on a plan to ban Russian oil in the next six months and refined imports by the end of the year.

The G7 group of wealthy nations decided on Sunday to gradually reduce their reliance on Russian energy to cripple the Russian oil trade.

ANZ commodity strategist Daniel Hynes said the markets are concerned that producers elsewhere will be unable to cover the expected disruption of 3 million barrels per day (bpd) after the ban on Russian oil comes into effect.

"OPEC ratified a small monthly increase in production, 400,000 bpd. But the reality is that they are struggling to even raise output," he said.

However, not all EU countries support a ban on Russian oil exports.

Bulgaria on Sunday said it would not support the bloc's new set of sanctions against Russia if the Balkan country does not get an exemption from the proposed ban on buying Russian oil.

The move came after Hungary, Slovakia, and the Czech Republic, which rely significantly on Russian oil, had requested a waiver from the planned EU embargo.

The European Commission recommended revisions to its first planned embargo on Russian oil on Friday, giving the three countries more time to relocate their energy suppliers, excluding Bulgaria.

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