Crude Oil Jumps as EU Slams Fresh Sanctions on Russia

During the session, Brent crude futures jumped by $1.33 or 1.84 per cent to $73.52 a barrel and the US West Texas Intermediate (WTI) crude futures rose by $1.70 or 2.48 per cent to $70.29 per barrel.

EU ambassadors agreed on a 15th package of sanctions on Russia over its war against Ukraine, targeting its shadow tanker fleet and Chinese firms making drones for the country.

The sanctions would target vessels from third countries supporting Russia’s war in Ukraine and add more individuals and entities to the sanctions list. It will not be adopted until after foreign ministers approve the package on Monday.

The shadow fleet has aided Russia in bypassing the $60 per barrel price cap imposed by the G7 on Russian seaborne crude oil in 2022 and has helped keep Russian oil flowing.

Prices were supported by the Energy Information Administration (EIA) which reported an estimated inventory decline of 1.4 million barrels for the week to December 6. In fuels, however, the EIA estimated sizable builds.

The crude oil inventory figure compares with a draw of 5.1 million barrels for the previous week that pushed prices higher for a while but the gains soon got erased by weak global demand growth prospects.

A day before the EIA, the American Petroleum Institute (API) had estimated inventory changes at a positive 499,000 barrels for the week to December 6.

Meanwhile, on Wednesday, the Organisation of the Petroleum Exporting Countries (OPEC) cut its 2024 global oil demand growth forecast for a fifth straight month and by the largest amount.

In its December report, the cartel expects 2024 global oil demand to rise by 1.61 million barrels per day, down from 1.82 million barrels per day last month.

OPEC also cut its 2025 growth estimate to 1.45 million barrels per day from 1.54 million barrels per day.

The 210,000 barrels per day cut in the 2024 figure is the largest of the five reductions OPEC has made in its monthly reports since August. In July, OPEC had expected world demand to rise by 2.25 million barrels per day.

Weak demand, particularly in top importer China, and non-OPEC+ supply growth were two factors behind the move.