Oil rises more than 3 dollars after news that Germany no longer opposes the Russian oil embargo

The oil prices They rose on Thursday after news that Germany is no longer opposed to an embargo on Russian oil, which could further reduce supply in an already tight global market.

Traders reacted to media reports of comments by German Economy Minister Robert Habeck, who said the European Union’s largest economy could face an embargo on imports of russian oilI heard that Germany hoped to find other supplies.

Brent crude futures rose $2.27, or 2.16%, to $107.59 a barrel. US crude West Texas Intermediate it gained $3.34, or 3.27%, at $105.36.

Germany is heavily dependent on Russian energy imports and had opposed an outright ban.

Before the war in ukraine, Russian oil accounted for about a third of Germany’s supply. A month ago, Habeck said the country had reduced its dependence on Russian oil to 25% of imports.

As a result of this, free world oil is going to be more expensive, and Iron Curtain oil is going to plummet further in value and become more discounted,” said John Kilduff, a partner at Again Capital LLC in New York.

Moscow has begun to use energy exports as a cudgel following the response of the United States and its allies to the Russian invasion of Ukraine.

Russia has cut gas supplies to Poland and Bulgaria and is trying to pressure the European Union to adopt its new gas payment system, which involves opening accounts in Gazprombank where payments in euros or dollars would be converted into rubles.

Russian oil production could fall as much as 17% in 2022, according to an Economy Ministry document seen by Reuters, as the country faces Western sanctions.

Despite this projected shortfall, the group of producers in the OPEC+which includes the Organization of Petroleum Exporting Countries and its allies, led by Russia, maintain its modest pace of output growth when it meets on May 5, sources told Reuters.

The dollar rose to a two-decade high on Thursday, buoyed by weakness in major rivals including the yen and euro. A stronger dollar is often bearish for oil prices as it makes it more expensive for buyers with other currencies.

In China, Beijing closed some public spaces and intensified controls on Covid-19 in others, as most of the city’s 22 million residents embarked on more mass testing in an effort to avoid a Shanghai-like lockdown.

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