Crude oil prices remain under pressure

The change of reference contract has brought Brent 1st-nearby back below $100/b, but it has already resumed its march back through that level. There is a special meeting of the International Energy Agency today, giving credence to the now quasi-official rumour of a possible 60mb release, half from US strategic reserves, half from a collection of OECD countries. But in parallel, the idea of sanctioning Russian hydrocarbon sales is also advancing.

Canada (which imports almost no Russian oil) has just announced an embargo on these imports. This is essentially symbolic, but it shows that it is no longer a taboo. If Russian oil were to run out, 3mb of oil would have to be replaced every day. One might think that China would take advantage of the huge discount on Ural prices compared to Brent to buy it by the back door, as it does for Iran, but even if the shock were lowered to 2mb/d, the 60mb of strategic reserves would only cover the loss for a month, hence the importance of encouraging a return of Iranian oil to the market as soon as possible. And in this case, we could hope for an increase in supply of around 1mb/d fairly quickly. This is still far from what would be needed.

Under these conditions, it is normal that oil prices remain under pressure. Even without sanctions, energy transactions are disrupted by the uncertainty in which buyers are placed and by the various measures taken by banks to withdraw from financing transactions involving the state or Russian companies, not to mention the physical risk of market disruption induced by the war.

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