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Oil Prices Surge Over News Of EU Mulling Russian Oil Ban, And Hit To Saudi Refinery Production

Oil Prices Surge Over News Of EU Mulling Russian Oil Ban, And Hit To Saudi Refinery Production
Oil prices rose $3 on Monday, with Brent topping $110 a barrel, as European Union countries consider joining the US in a Russian oil embargo, while a weekend attack on Saudi oil installations sparked fears.
Brent crude futures were up $3.44, or 3.2 percent, to $111.37 a barrel by 0443 GMT, following a 1.2 per cent gain the previous day.
WTI crude futures in the United States climbed $3.54, or 3.4 percent, to $108.24, following a 1.7 per cent gain from Friday.
Prices rose ahead of discussions between European Union countries and US President Joe Biden this week for a series of summits aimed at toughening the West's response to Moscow's invasion of Ukraine.
Governments in the EU are debating whether or not to impose an oil embargo on Russia.
Iryna Vershchuk, Ukraine's deputy prime minister, said early Monday that the country's military in the besieged eastern port city of Mariupol had no possibility of surrendering. With no signs of the war diminishing, the question of whether the market could replace Russian barrels affected by sanctions resurfaced.
"A Houthi attack on a Saudi energy terminal, warnings of a structural shortfall in production from OPEC, and a potential European Union oil embargo on Russia have seen oil prices jump in Asia," OANDA's senior analyst Jeffrey Halley said in a note.
"Even if the Ukraine war ends tomorrow, the world will face a structural energy deficit, thanks to Russian sanctions."
Attacks by Yemen's Iran-aligned Houthi group resulted in a temporary reduction in output at a Saudi Aramco joint venture in Yanbu over the weekend, adding to concerns in a nervous oil products market where Russia is a key supplier and global inventories are near multi-year lows.
According to the latest report from the Organization of Petroleum Exporting Countries and its allies, which includes Russia and is known as OPEC+, certain suppliers are still falling short of their agreed-upon production targets.
Three sources told Reuters that OPEC+ missed its production target by more over 1 million barrels per day (bpd) in February, despite its agreement to increase output by 400,000 bpd each month as they reverse significant cuts taken in 2020.
Saudi Arabia and the United Arab Emirates, the two OPEC members with the ability to rapidly increase supply, have so far resisted pleas from big consuming nations to increase production faster in order to help bring down oil prices.
Despite high prices, US energy companies are battling to maintain the number of operating oil rigs.
The International Energy Agency outlined ideas on Friday to cut oil use by 2.7 million bpd in four months, ranging from carpooling to lower speed limits and cheaper public transportation, in response to the dismal supply outlook and high prices. find out more
This would help offset the 3 million bpd of Russian crude and products expected to be off the market by April, according to the IEA.

Christopher J. Mitchell

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