Oil slips below $114/barrel as EU split on Russian ban

London — Oil slipped below $114 a barrel on Tuesday, giving up some of the previous day’s 7% surge, as EU members disagreed on a potential oil embargo on Russia, though persistent supply risks limited the decline.

EU foreign ministers are split on whether to join the US in banning Russian oil. Some countries, including Germany, say the bloc is too dependent on Russia’s fossil fuels to withstand such a step.

Brent crude fell $1.92, or 1.7%, to $113.70 a barrel at 9.20am GMT, while West Texas Intermediate was down $2.82, or 2.5%, to $109.3. Both contracts rose more than 7% on Monday.

Oil was also pressured lower as the US dollar strengthened on comments from Federal Reserve chair Jerome Powell on Monday that flagged a more aggressive tightening of monetary policy than previously expected. A strong dollar makes crude more expensive for other currency holders and tends to weigh on risk appetite.

“The word ‘transitory’ regarding inflation is a distant memory, chiefly due to rising commodity prices,” said Tamas Varga of broker PVM. “Central banks, led by the Federal Reserve stand ready to increase the cost of borrowing significantly.”

Brent touched $139 a barrel, the highest since 2008, earlier this month. Threats to supply from the war in Ukraine and attacks by Yemen’s Iran-aligned Houthi group on Saudi energy and water desalination facilities limited the downside.

Saudi Arabia said on Monday it would not bear responsibility for any global supply shortages after the attacks by the Houthis, in a sign of growing Saudi frustration with Washington’s handling of Yemen and Iran.

In focus later will be the latest round of US inventory data, which analysts expect to show no change in crude oil stocks. The American Petroleum Institute, an industry group, issues its supply report later on Tuesday.

Reuters

Source: businesslive.co.za