Oil Prices Steady After Rise

By David Ho

Oil prices experienced a decline on Thursday morning in Asia as markets steadied following an initial boost caused by Russia imposing sanctions on certain European gas companies.

As of 11:01 PM ET (3:01 AM GMT), crude oil fell by 1.00% to $106.44, while Brent crude decreased by 0.99% to $104.66.

On Wednesday, Russia responded to sanctions imposed by 31 companies from nations that acted against Moscow after its invasion of Ukraine in February. This move has contributed to market unease, particularly as Russian gas flows to Europe through Ukraine have decreased by a quarter, marking the first disruption of exports via this route since the invasion began.

So far this year, oil prices have surged over 35% due to concerns about supply constraints. The European Union is currently negotiating a potential embargo on Russian oil, an action that analysts predict would further tighten the market and alter trade dynamics. However, unanimous agreement among member states is necessary for the vote to pass, and Hungary has expressed its opposition.

Price increases have also been tempered by concerns regarding waning demand from China, which is implementing lockdowns to control the spread of the coronavirus.

Stephen Innes, managing partner at SPI Asset Management, stated, "Until we see some significant policy support coming through in China or policymakers adopt an alternative strategy to COVID (which seems very unlikely), oil prices could remain capped in the near term."