Oil prices surge as EU countries consider banning Russian Crude

Oil prices rallied early on Monday amid EU consultations about potentially joining the U.S. in banning imports of Russian oil.

As of 7:45 a.m. ET on Monday, WTI Crude was up 3.87% at $108.91 and Brent Crude was trading up 3.93% at $112.30.

Separately, prices were driven higher after an attack from the Iran-aligned Houthi rebels over the weekend targeted energy facilities in Saudi Arabia, the world’s top oil exporter and de facto leader of OPEC.

According to the Saudi energy ministry, strikes carried out by drones hit a distribution terminal for refined oil products in the region of Jizan, a refinery on the Red Sea port of Yanbu, and a natural gas plant.

In Europe, several EU countries, including Ireland and Lithuania, believe that the European Union should impose more severe sanctions on Russia, including on its energy sector. EU ministers has begun a week of consultations to decide whether and how to step up sanctions against Russian over its invasion of Ukraine.

France sees a potential ban on imports of Russian energy into the EU as an option, its Economy and Finance Minister Bruno Le Maire said over the weekend, adding that sanctions are hurting Russia and Vladimir Putin.

“Should we in the immediate stop buying Russian oil, should a little bit further down the line we stop importing Russian gas? The president has never ruled out these options,” the French minister told LCI television in an interview on Sunday.

However, the European Union and its biggest economy Germany have been reluctant so far to ban imports of Russian energy or impose sanctions on Russian oil and gas exports, considering that Europe depends on Russia for more than one-fourth of its oil supply and one-third of its natural gas supply.

Oil “rose to a one-week high in Asia as the war in Ukraine keeps global supplies very tight with traders, mostly through self-sanctioning, avoiding Russian crude, currently being offered close to 30-dollar below Brent with a limited number of buyers queuing up to secure cheap cargoes,” Saxo Bank’s strategy team wrote in a note on Monday.

“With supply tightening, the market will be looking for signs of demand destruction, mostly through the cost of diesel and gasoline as well as the impact of temporary covid related lockdowns in China,” the bank’s strategists added.

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