Written on: June 1, 2022
A European Union agreement to ban 90% of crude oil imports from Russia by the end of the year caused a surge in prices on Tuesday to as high as $119.43 per barrel, a price last seen in early March not long after the initial invasion of Ukraine by Russia. Crude prices did retreat though later in the day to $114.67 per barrel after a report in the Wall Street Journal that OPEC is considering suspending Russia from the group’s output agreement. The EU agreement came after weeks of deadlock as Hungary had initially slowed talks significantly and will immediately impact 75% of Russian oil and 90% by year-end.
As war in Ukraine continues, propane inventories in the U.S. are back on par with 2021 levels however Midwest and Gulf Coast supplies are still lagging behind year-ago levels. Demand for propane in Europe during the crisis in Ukraine may increase as the next weeks and months unfold. A May 31 statement from the European Union said a sixth package against Russia will cover crude oil, as well as petroleum products, delivered from Russia into Member States, with a temporary exception for crude oil delivered by pipeline.
Approximately 36% of the EU’s oil imports come from Russia. The ban on Russia oil will likely cause continued concern over prices as the market is already tight in an energy market where prices have soared in the past couple of years. OPEC is expected to keep with its plan of a increasing output of 432,000 barrels a day in July. The likelihood of increased OPEC output has many analysts expecting a modest decline in crude oil prices but analysts warn that anything can happen in this current unpredictable market.