Oil Prices Jump after EU Leaders Agree to Ban Russian ...
The new jump in oil prices after the European agreement to ban 90% of Russian crude
Brent futures above $124 per barrel
Oil prices jumped again Tuesday, after EU leaders late Monday reached an agreement to ban 90 per cent of Russian crude by the end of the year.
Brent crude futures rose more than $2 to $124.07 a barrel, after earlier rising to $124.10 a barrel, their highest level since March 9. U.S. crude futures increased more than $3 to $118.52 per barrel, up for the fourth straight session.
The European agreement ends the deadlock after Hungary initially suspended talks, with Hungary being a major user of Russian oil.
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European Council President Charles Michel said the move would immediately cover 75% of Russia's oil imports.
The ban is part of a new sanctions package, the sixth imposed by the European Union on Russia since its invasion of Ukraine.
"The European Council agrees that the sixth package of sanctions against Russia will include crude oil, as well as petroleum products, delivered from Russia to member states, with the temporary exception of crude oil delivered through the pipeline," the European Council said in a May 31 statement.
The council added that in the event of "sudden disruptions" to supplies, "emergency measures" would be introduced to ensure the security of supplies.
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European Commission President Ursula von der Leyen told a press conference that the temporary exception covers the remaining Russian oil, which has not yet been banned.
"We have agreed that the Council will return to the subject as soon as possible in one way or another, so we still have to work on it, but this is a big step forward."
Von der Leyen explained that the temporary exemption had been granted so that Hungary, along with Slovakia and the Czech Republic -- all connected to the southern part of the pipeline -- could easily replace oil.
Nearly 36% of EU oil imports come from Russia, a country that plays a huge role in global oil markets.
The ban could exacerbate concerns about an energy market already hungry for increased supply.
"While pipeline imports are not included in this agreement, the ban on seaborne oil imports remains significant, accounting for about two-thirds of EU oil imports from Russia," Commonwealth Bank of Australia Director of Mining and Energy Commodities Research Vivek Dhar wrote in a note.
"An additional ban on Russian crude oil delivered by sea will reduce already tense supply amid rising demand due to the start of the U.S. driving season," wrote Philip Nova, senior commodities manager at the trading platform.
OPEC Plus is expected to stick to its plan of a modest increase of 432,000 barrels per day for July, Sandow said.