Oil and natural gas prices rally on EU sanction proposal
The EU proposes phasing out Russian oil dependance while discussing the prospect of natural gas as well.
EU proposes second round of sanctions on Russian oil
Oil prices have been given another short-term lift on the prospect of further sanctions by the European Union (EU).
The European Commision (EC) executive of the EU is looking to phase out its energy dependence from Russia, on the back of ongoing war crimes against Ukraine.
Last month, the EU announced sanctions on Russian coal imports and this month the region has put forward a proposal to restrict imports of Russian oil. The EC proposal suggests phasing out oil imports from Russia over a six-month period and refined crude products by year-end.
Russian crude imports have historically accounted for around 25% of that consumed by the EU.
Exemptions applied for by EU nations
Slovakia and Hungary could only have to phase out dependance by the end of 2023 should the proposal meet acceptance. However, it appears unlikely that these two countries will support the proposal.
Germany, Europe’s largest economy, has recently supported the notion of further sanctions on oil from the region.
Sanction proposal extends further than just oil
Included in the proposal to ban Russian oil imports, the EU suggests removing three major banks, including Sberbank, from the international payment system, ‘Swift’. Sberbank is Russia’s largest commercial bank. The move would look to further financially cripple the nation.
The proposal also looks at placing bans on three Russian state broadcasters.
EU discusses natural gas imports as well
Natural gas imports from Russia have historically accounted for around 40% of the EU’s gas purchases.
The high level of dependence of gas imports disallows the prospect of an immediate embargo, although another phased sanctioning approach in future could be the next commodity play targeted by the EU.
EU members are currently said to be discussing the prospect of banning the energy source used predominantly for electricity and heating.
Brent crude – technical view
The long-term trend for Brent remains up as the price continues to trade firmly above the 200 day simple moving average (SMA).
In the short- to medium-term the price appears to be consolidating. We have seen a bullish intraday price reversal off the 9890 support level.
Traders who are long from the reversal may continue to target 11285 as the initial resistance target from the move. A break above this level, confirmed with a close, would suggest 12000 as a further upside resistance target.
Traders who are long might consider using a close below 10300 as a stop-loss indication for the trade.
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