Oil futures edged higher Tuesday, finding support as investors gauged the prospect of a European Union ban on Russian crude imports.
Oil jumped more than 7% on Monday as EU foreign ministers discussed joining the U.S. in banning Russian crude imports. The discussions, however, ended without agreement, with Germany, Europe’s largest economy, arguing that the region is too dependent on Russian energy to implement a ban, news reports said.
Citing data from the International Energy Agency, analysts at Commerzbank noted that European OECD countries imported close to 4 million barrels of crude oil a day from the countries of the former Soviet Union in the fourth quarter of 2021, with the lion’s share likely to have come from Russia. On top of that, around 570,000 barrels of diesel/gasoil were imported a day, they said, leaving up to 4.5 million barrels a day of crude oil and oil products that would need to be sourced elsewhere.
“This is virtually impossible to imagine without the oil price rising significantly, which the market also appears to be pricing in at present,” they wrote.