Oil prices surge. Oil prices surge 10 per cent as EU members split on Russian oil ban

Crude oil futures went up by nearly 10 per cent on Tuesday following reports that some countries in the European Union are planning to impose sanctions on Russian oil.

At the time of filing this report, May Brent oil futures were at $118.80, up almost 10 per cent and May crude oil futures on WTI at $114.68, up by 2.36 per cent.

April crude oil futures were trading at ₹8,624 on Multi Commodity Exchange (MCX) in the initial hour of Tuesday morning against the previous close of ₹8,331, up by 3.52 per cent; and May futures were trading at ₹8,435 against the previous close of ₹8,163, up by 3.33 per cent.

The meeting of foreign ministers of the European Union at Brussels on Monday was divided over the decision to impose sanctions on Russia’s energy sector. While some member countries strongly favoured imposing sanctions on Russia’s oil sector following its war with Ukraine, others, including Germany, opposed such a move as it would affect the energy security of those countries.

Quoting the German Foreign Minister Annalena Baerbock, reports said: “The question of an oil embargo is not a question of whether we want or don’t want it, but a question of how much we depend on oil.”

She said that Germany is importing a lot of Russian oil. There are also other member countries who cannot stop the oil imports from one day to the other, she added.

Reacting to the attack of Houthis on its oil facilities, Saudi Arabia also made it clear that it would not bear responsibility for disruptions to global oil supply following attacks on its facilities.

Heading for best run in a month

In his crude oil outlook for the day, Rahul Kalantri, VP (Commodities) of Mehta Equities Ltd, said crude oil price surged for a fourth day, heading for the best run in a month and gained around 18 per cent in last four days on signs the EU may be edging closer to a ban on Russian crude imports.

Stating that Russia is one of the largest exporters of oil to the EU, he said banning Russian oils could be havoc. However, EU allies Germany and Hungary are not agreeing to a ban on Russian oil imports. The EU is scheduled to meet on Thursday to discuss sanctions on Russian oil. Despite rising productions from the US and demand concerns due to rising coronavirus cases, crude oil is ruling strong in international markets, he said, adding: “We expect crude oil prices remain firm, crude oil is having support at $104.5–101.20 and resistance is at $114.20–117.00. In rupee terms crude oil has support at ₹8,000-7,820; while resistance is at ₹8,550–8,680.”

April natural gas futures were trading at ₹380.20 on MCX in the initial hour of Tuesday morning against the previous close of ₹375.20, up by 1.33 per cent.

Guar gum gains

On the National Commodities and Derivatives Exchange (NCDEX), April cottonseed oilcake futures were trading at ₹3,220 in the initial hour of Tuesday morning against the previous close of ₹3,172, up by 1.51 per cent; and May cottonseed oilcake futures were trading at ₹3,236 against the previous close of ₹3189, up 1.47 per cent.

April guar gum contracts were trading at ₹112,61 on NCDEX in the initial hour of Tuesday morning against the previous close of ₹11,197, up by 0.57 per cent; and May guar gum contracts were trading at ₹11,388 against the previous close of ₹11,323, up by 0.57 per cent.

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