Oil pushed higher ahead of high-level meetings that may result in fresh sanctions on Russia, and as storm damage to a vital Black Sea export terminal compounded supply risks.
West Texas Intermediate futures topped $113 a barrel. European Union and NATO leaders are set to gather in Brussels on Thursday to beef up their response to Russia’s invasion of Ukraine. Ahead of the meetings, White House National Security Adviser Jake Sullivan said that the U.S. and its allies will impose further sanctions on Moscow.
With the conflict dragging on, the EU is weighing a possible ban on Russian crude imports, though some member states including Germany have opposed such a move. Many buyers however are already shunning the nation’s oil, with TotalEnergies SE saying it will stop purchases by the end of the year, while Japanese refiner Eneos Holdings Inc. will halt new shipments.
Industry report shows U.S. oil stockpiles slipped last week
Prices were also higher on Wednesday with the Caspian Pipeline Consortium’s export terminal on the Black Sea halting loadings. Russia, which sends some crude through the terminal, said Tuesday that exports could be curtailed by 1 million barrels a day, but the disruption could be bigger if all shipments through the terminal are stopped. Russian Deputy Prime Minister Alexander Novak said the repairs could take up to two months.
“Prices are ticking higher with focus on tomorrow’s EU and NATO meeting, not least considering the potential bullish market impact should the EU decide to embargo oil and fuel products from Russia,” said Ole Hansen, head of commodity strategy at Saxo Bank A/S. The CPC disruption “is the last thing the market needs right now.”
Further bullish signals came from the industry-funded American Petroleum Institute data showing crude inventories sank by 4.3 million barrels last week, according to people familiar with the numbers. If confirmed by official data due later Wednesday, it would be a third drop in four weeks.
With many buyers avoiding Russian crude, the country’s flagship Urals grade has plunged, while some April-loading shipments were canceled. That’s adding to the signs of increased pressure on the nation’s oil market.
Nevertheless, some Russian flows are still finding takers. India’s refiners have grabbed multiple cargoes of Urals crude this month, while China’s private processors are thought to be targeting favored grades from the east of Russia.