Since the beginning of the war in Ukraine, the prices of gas and oil take only the direction upwards. In the middle of the week, oil prices once again rose sharply. The reason for this is further supply shortfalls, which are likely to further tighten the already tight oil supply.
Oil prices are not expected to decline in the near term either, as other factors such as the new Putin directive to pay for gas supplies and a larger-than-expected decline in U.S. oil inventories could cause additional price increases.
Severe shortage of oil even without oil embargo
The war of aggression in Ukraine has already resulted in numerous sanctions for Russia by Europe and the USA. However, an oil embargo is not one of them so far. Some countries, especially Germany, have so far vehemently resisted completely stopping Russian gas supplies, as the energy dependency on Russia is far too high for that.
But even without an oil embargo, Russian oil is currently hardly finding any more buyers in Western countries. The oil supply in Europe is therefore already more than tight.
Export terminal in Russia damaged
Now an export terminal near Russia’s Black Sea port of Novorossiysk has also been damaged by a severe storm. Oil exports from CPC (Caspian Pipeline Consortium) are handled through this terminal. This is primarily oil from Kazakhstan.
According to the Russian Energy Ministry, the repairs are expected to take up to two months, which means that Kazakh oil will now also be off the European market for the time being.
Other factors are also responsible for the renewed price increase
In the middle of the week, Russian President Vladimir Putin had issued the official instruction that gas purchases from so-called “unfriendly states” may only be paid for in rubles after a transitional period of one week.
Experts therefore believe that it is entirely possible that countries with a high dependence on Russian gas will decide in favor of an energy embargo after all. This would further tighten the oil supply in Europe, so that the oil price is unlikely to fall for the foreseeable future.
Experts see the latest inventory data from the U.S. Department of Energy as another price driver. According to this, U.S. oil inventories are showing a much steeper decline than previously expected. Both gasoline and distillate stocks and crude oil stocks declined. Only crude oil inventories at Cushing increased by 1.2 million barrels.
Yesterday alone, the prices for Brent oil and gas oil rose by more than 5 percent per barrel and per ton, respectively. The ongoing war in Ukraine and the other price-driving factors are likely to ensure that the oil price will continue to rise in the near future.