Russian War Crime Charges Fuel Further Sanction Discussions
April 5, 2022
The news is full of reports of Russia committing war crimes in Ukraine and the European Union is adding additional sanctions in response. The EU is proposing banning coal imports along with a host of other possibilities. The list of possible actions includes banning Russian trucks and vessels from entering the EU, adding more people to the sanctions list, and banning all transactions from four Russian banks as well as a host of others. These actions are bullish for the market as it concerns the market about retaliation with energy in an already tight market.
Also bullish for prices was Saudi Aramco announcing it is raising oil prices in all areas including 4 types of oil sold to the US, which will increase by another $2.20 per barrel from April.
The following is from John Kemp a Reuters reporter: US petroleum inventories including the strategic petroleum reserve have depleted by 411 million barrels since the start of July 2020 after increasing by 225 million barrels during the first wave of the pandemic and lockdowns. Inventories have fallen in sixty-eight of the last 91 weeks. The drawdowns confirm the global market has been persistently under-supplied for almost two years.
The following is from Phil Flynn of the Price Futures Group. Saudi Arabia is looking at this Biden crisis as an opportunity. The Saudis raised their OSP (Official Selling Price) of oil by a historic amount, encouraging buyers to look to the US for supply. The Saudis want to drain the US oil inventory, which could make us more dependent on the kingdom for oil in the future and, at the same time, leave our economy vulnerable.
Lithuania became the first European country to cut off Russian gas imports, urging all of the EU to do the same. As of now, this is unlikely as it has been stated that cutting off gas imports will do more harm to the EU than Russia at this point.
Shanghai has put its population of 25 million people under lockdown as it battles 13,000 new cases of COVID-19.