[Asia Economy New York=Special Correspondent Joselgina] International oil prices surged more than 7% on news that the European Union (EU) is considering a ban on Russian oil imports. The international benchmark Brent crude oil soared back to the $115 per barrel range.
On the 21st (local time) at the New York Mercantile Exchange, the April West Texas Intermediate (WTI) crude oil price closed at $112.12 per barrel, up $7.42 (7.1%) from the previous session. The May Brent crude oil contract on the London ICE Futures Exchange also jumped 7.1% ($7.69) to $115.62 per barrel.
This is interpreted as a result of growing global supply concerns following reports that EU countries are considering joining the U.S. and the U.K. in imposing energy sanctions against Russia.
Major foreign media outlets cited a senior EU diplomat on the day, reporting that the EU's upcoming fifth sanctions package against Russia may include a ban on Russian oil imports. At the EU foreign ministers' meeting held that day, Lithuania and Ireland supported the Russian energy sanctions, while Germany and the Netherlands expressed opposition.
In particular, with U.S. President Joe Biden's visit to Europe scheduled for this week, there is speculation that discussions on strengthening sanctions against Russia may be revisited.
However, Russia has threatened to shut off gas pipelines to Europe if the EU sanctions Russian oil. Considering that the EU depends on Russia for 40% of its natural gas, it is expected that the EU will find it difficult to use the energy sanctions card.
Karsten Fritsch, an analyst at Commerzbank, said, "The EU's dependence on Russian crude oil is higher than that of the U.S. In the case of diesel, Russian crude accounts for up to 80% of net imports," adding, "(If imports are banned) it could further tighten the market."
Additionally, news that Saudi Arabia's oil facilities were attacked by Yemeni rebels also contributed to the upward pressure on oil prices that day. The Saudi Ministry of Energy announced that the Aramco refinery facility in Yanbu, a city on the Red Sea coast, was attacked by drones the previous day. Although the damage is reported to be minor, the market is concerned about potential supply disruptions.
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