The benchmark Brent crude oil futures crossed $123 a barrel on Tuesday morning following European Union’s decision to impose sanctions on the import of Russian crude oil following its war with Ukraine.
At 10.05 am on Tuesday, July Brent oil futures were at $123.20, up by 3.15 per cent; and July crude oil futures on WTI were at $118.53, up by 1.15 per cent.
June crude oil futures were trading at ₹9,210 on Multi Commodity Exchange (MCX) in the initial hour of Tuesday morning against the previous close of ₹9,080, up by 1.43 per cent; and July futures were trading at ₹9,20 as against the previous close of ₹8,896, up by 1.39 per cent.
Charles Michel, President of European Council, said in a tweet that the meeting of the council agreed a sixth package of sanctions on Russia. This will allow a ban on oil imports from Russia.
He said the sanctions will immediately impact 75 per cent of Russian oil imports. By the end of 2022, 90 per cent of the Russian oil imported in Europe will be banned, he said.
According to President of the European Council, this move will cut a huge source of financing for Russian war machine, and put maximum pressure on Russia to end the war.
European Council posted on its Website that the sixth package of sanctions against Russia will cover crude oil, as well as petroleum products, delivered from Russia to member states. “A temporary exception for crude oil delivered by pipeline will be made. In case of sudden interruptions of supply, emergency measures will be introduced to ensure security of supply,” European Council said.
It said the leaders urged the Council of the European Union to finalise and adopt the new sanctions without delay, ensuring a well-functioning EU single market, fair competition, solidarity among member states, and a level-playing field for phasing out EU dependency on Russian fossil fuels.
This move will further bring down the supply of the crude oil to the already tight global markets.
Another factor that will push the demand for the crude oil is the relaxation of Covid-induced lockdown norms in China as it is gradually opening up its cities. China is a major consumer of crude oil in the global market.
June natural gas futures were trading at ₹677.30 on MCX in the initial hour of Tuesday morning against the previous close of ₹678.80, down by 0.22 per cent.
On the National Commodities and Derivatives Exchange (NCDEX), June maize (feed/industrial grade) futures were trading at ₹2,215 in the initial hour of Tuesday morning against the previous close of ₹2,181, up by 1.56 per cent.
June steel long contracts were trading at ₹48,400 on NCDEX in the initial hour of Tuesday morning against the previous close of ₹48,670, down by 0.55 per cent.
May 31, 2022