ICDX's Crude oil prices until the close of the first week of May still showed a positive trend with price movements closing up by 5.1 percent. The main catalyst driving oil prices is still focused on the Ukraine conflict which is still ongoing and has triggered a series of new sanctions against Russia, where one of the latest proposed sanctions from the European Union targets the Russian oil embargo (4/5).
In addition, the threat of disruption of natural gas supply in Europe has increased after Russia on April 27 officially stopped gas supplies to Bulgaria and Poland, which also marked the realization of Russia's request for payments in rubles. On the other hand, in its May 5 meeting, OPEC+ decided to keep production at 432,000 bpd in June and confirmed its reluctance to add more supply to the market.
Meanwhile, a resurgence of COVID-19 cases in China, which has forced strict restrictions in several important cities including Shanghai, the financial center of China, and the capital Beijing, has sparked fears it will lead to a further decline in China's demand for oil. Referring to China's latest customs data, it can be seen that crude oil imports by the world's first-largest oil-importing country fell 4.8% in the first four months of this year compared to the same period last year.
Without the Ruble, Europe Must Find Another Gas Supplier
Following the cessation of gas supplies to Poland and Bulgaria, Russian President Vladimir Putin ordered the creation of a working group on international payments (9/5) whose task will include seeking provisions for transactions with countries deemed unfriendly including the US, Canada, UK, and other European Union member states countries. Under the scheme Putin outlined in March, hostile countries are required to open an account at Gazprombank and make payments in euros or dollars, to be converted into Russian currency. This news indicates Russia's seriousness in stopping gas supplies to Europe if its demand is not met, which at the same time can encourage a recurrence of the gas crisis in Europe last year.
EU Prepares for Russia Oil Embargo
In the latest proposed sanctions proposals to be implemented by the European Union (EU) Commission on May 4, one of them targets an embargo on Russian oil, which will be carried out simultaneously after the proposal is agreed upon by all EU members states. Under the proposal, the EU plans to impose a ban on imports of Russian crude oil for the next six months and refined fuel in early January. However, in the May 9-10 meeting, the EU Commission decided to postpone the proposal until May 16 because several member countries strongly rejected the proposed embargo, where one of the biggest rejections coming from Hungary.
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Source: ICDX Research