Luke Sarret Bloomberg | Getty Images Oil prices rose on Thursday after reports that Germany was no longer opposed to an embargo on Russian oil, which could further tighten supplies in the already pressed global crude market. German envoys to the European Union are no longer opposed to a full-blown Russian oil embargo if Berlin is given time to secure alternative supplies, the Wall Street Journal reported on Thursday. The article echoed German Economy Minister Robert Habeck on Tuesday, saying the EU’s largest economy could face an EU embargo on Russian oil imports and hoped to find ways to replace Russian oil with another supply. Brent crude futures rose 2.2% to $ 107.59 a barrel. US crude West Texas Intermediate was 3.3% higher at $ 105.36 a barrel. Germany is heavily dependent on Russian energy imports and has in the past opposed a total ban. Before the war in Ukraine, Russian oil accounted for about a third of Germany’s supply. One month ago, Germany’s finance minister said Germany had reduced its dependence on Russian oil to 25 percent of its imports. “As a result, oil from the free world will be more expensive and oil from the iron curtain will fall further in value and have a bigger discount,” said John Kilduff, a partner at Again Capital LLC in New York. Russia began using energy exports as a hood following a response from the United States and its allies to Moscow’s invasion of Ukraine. Russia has cut off gas supplies to Poland and Bulgaria and is trying to force the EU to adopt its new gas payment system, which includes opening accounts at Gazprombank where payments in euros or dollars would be converted into rubles. Russia’s oil production could fall by as much as 17% in 2022, according to a Economy Ministry document seen by Reuters as the country faces Western sanctions. Despite this expected deficit, the OPEC + producer group, which consists of the Organization of the Petroleum Exporting Countries and allies led by Russia, is expected to maintain a modest output growth at its May 5 meeting, sources told Reuters. The US dollar jumped to a two-decade high on Thursday, driven by the weakness of its big rivals such as the yen and the euro. A stronger dollar is usually lower for dollar-denominated oil prices, as it makes it more expensive for holders of other currencies. In China, Beijing closed some public spaces and tightened controls on COVID-19 to others, as more than 22 million people in the city began more massive testing in an effort to prevent a Shanghai-like lockdown. The latest lockdown has disrupted factories and supply chains, raising fears about the country’s economic growth. However, Asia’s largest oil refining company, Sinopec Corp, expects the country’s demand for oil refining products to recover in the second quarter as COVID-19 cases are gradually brought under control. A slowdown in global growth due to higher commodity prices and the escalation of the Russia-Ukraine conflict could further exacerbate fears about oil demand.
