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As a more direct way to sanction Russia, European Union leaders are looking at boycotting Russian crude oil and gas supplies.
Global oil prices are on the rise as the Russia-Ukraine war continues to escalate as recent peace talks between the two camps have continued to end in stalemates. The crisis has stirred a supply shock that has pushed the Brent Crude up 4.10% to a price of $112.4. The West Texas Intermediate (WTI) is changing hands at $109.3, atop a 4.35% gain. Natural gas is trading at $4.938, up 1.62% in the past 24 hours.
The growth is good news for oil-producing states and a bad one for predominantly oil-consuming nations. Oil prices have been relatively volatile over the past few weeks as prices climbed to All-Time Highs (ATH) this March, even though prices have pared off. According to a note to clients published by Mizuho Bank on Monday, the two predominant factors pushing oil prices at the moment are the lingering Russia-Ukraine crisis and the fears of uncertainty around the latest upsurge in the Chinese COVID-19 outbreak.
“The breakdown of peace talks between Russia and Ukraine saw crude oil prices extend their rebound on Friday,” ANZ Research analysts Brian Martin and Daniel Hynes wrote in a Monday note. “However, it failed to offset the losses earlier in the week, with Brent crude ending down more than 4%.”
Amid the growing oil prices, the Commonwealth Bank of Australia warned Monday that prices have dropped from the latest highs as the global market is still assessing the possibility of Russia and Ukraine settling their dispute in a more diplomatic way in the near term.
“Physical shortages, linked to current sanctions on Russia, though will eventually play a more dominant role in oil price determination,” said Vivek Dhar, the bank’s director of energy commodities research, in a note.
As a more direct way to sanction Russia, European Union leaders are looking at boycotting Russian crude oil and gas supplies. The modalities of this move are billed to be discussed with President Joe Biden in a planned meeting this week.
Global Oil Prices and the IEA Counsel
As the supply strain continues to take effect and the prices rise, the International Energy Agency (IEA) on Friday called for the implementation of “Emergency Measures” to cut global oil demand by 2.7 million barrels a day, reducing the risk of a damaging supply crunch. The IEA gave 10-point advice on how to cut energy usage including the reduction of speeds on highways by at least 10 Km/h which will save around 290 kb/d of oil use from cars, and an additional 140 kb/d from trucks.
The IEA also advocated the use of micro commuting including walking and cycling as well as working from home at least three times a week where applicable. The major recommendations in the 10-point plan involve a change in the behavioral pattern of individuals, as could be enacted by governments around the world.