Oil stable as EU tweaks sanctions

European bloc allows Russian oil shipments to third countries

HOUSTON:

Brent crude prices were little changed in choppy trading on Friday after the European Union said it would allow Russian state-owned companies to ship oil to third countries under an adjustment of sanctions agreed by member states this week.

Brent crude futures climbed 20 cents, or 0.2%, to $104.03 a barrel by 1730 GMT, while US West Texas Intermediate (WTI) crude fell 64 cents, or 0.6%, to $95.70 a barrel.

Russian state-owned companies Rosneft and Gazprom will be able to ship oil to third countries in a bid to limit the risks to global energy security.

Under tweaks to sanctions on Russia that came into force on Friday, payments related to purchases of Russian seaborne crude oil by EU companies would not be banned.

The EU announcement comes after Russian Central Bank Governor Elvira Nabiullina said it will not supply crude to countries that decide to impose a price cap on its oil and instead redirect it to countries which are ready to “cooperate” with Russia.

“Perceptions are growing that the US and EU will implement price caps on Russian oil by year end,” said Dennis Kissler, senior vice president of trading at BOK Financial.

“Past history shows that government-induced price caps on commodities are usually short lived and can result in exaggerated prices soon after,” he added.

WTI was on track to close lower for the third straight week, pummelled over the past two sessions after data showed that US gasoline demand had dropped nearly 8% from a year earlier in the midst of the peak summer driving season, hit by record prices at the pump.

Published in The Express Tribune, July 23^rd, 2022.

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