Oil prices jumped after European Union leaders late Monday to ban 90% of Russian crude by the end of the year. During Tuesday’s Asian hours, US crude futures were up more than 2% to $117.74, while Brent crude futures were up 0.62% to $122.43.
The deal broke the deadlock after Hungary started talks. Hungary is a major consumer of Russian oil and its leader, Viktor Orban, is a friend of Russia’s Vladimir Putin.
Charles Michel, president of the European Council, said the move would soon account for 75 percent of Russia’s oil imports. The embargo is part of a package of EU sanctions against Russia since the invasion of Ukraine.
Talks about imposing an oil embargo have been going on since the beginning of the month. The sanctions imposed by the European Union have been well received by the Russian side and may offer solutions to other parties for the offered petroleum production.
“The European Council agrees that the sanctions package against Russia will cover crude oil as well as oil products shipped from Russia to member states, with a provisional plan for crude oil transported via pipeline,” according to a May 31 statement from the Council of Europe.
The European Council added that in the event of a supply “disruption”, “emergency measures” would be taken to ensure supply security. Temporary exceptions include remaining Russian oil, which has not been banned, European President Ursula der Leyen told a news conference.
We have stated that the Board will return in one way or another this may change. So it’s an issue that we’re backing away from and we still have to work on, but it’s a big step forward from what we’ve accomplished today,” he said, referring to interim deliberations.
Von der Leyen explained that the temporary reduction was given to support Hungary, along with Slovakia and the Czech Republic, all of which are connected to the southern part of the pipeline, to have the access they cannot easily replace.
oil imports from Russia, a country that plays a key role in the world’s oil market. The ban could add to the already tight energy market. Energy prices have skyrocketed over the past year, contributing to an environment that increases inflation in many countries.
“Although pipeline imports are not included in this deal, the cross-border oil import embargo remains significant and accounts for about two-thirds of EU oil imports from Russia,” Vivek Dhar, Research Director of Mining and Energy Resources at the Commonwealth Bank. from Australia, he wrote in a note following the news.
“Another ban on Russian oil shipments by sea will reduce supply already strained in the middle and demand due to the start of the US driving season,” wrote Avtar Sandu, senior commodities manager at trading platform Philip Nova.
Meanwhile, OPEC+ is expected to stick to its early start for a modest 432,000 BPD gain for July, Sandu added. By limiting the use of oil and gas from one of the largest suppliers, the European Union is expected to get the support of qualified human resources to create alternative energy that is environmentally friendly and economically sustainable.