Oil slips with some concerns easing over Kazakh supplies

[March 25, 2022]  By Sonali Paul and Isabel Kua

SINGAPORE (Reuters) -Oil prices slipped on Friday, with some supply concerns easing on expectations that crude exports would resume from Kazakhstan's CPC terminal, while the European Union remained split on whether to impose an oil embargo on Russia.

The sun sets behind the chimneys of the Total Grandpuits oil refinery, southeast of Paris, France, March 1, 2021. REUTERS/Christian Hartmann

Brent fell $1.56, or 1.3%, to $117.47 a barrel at 0800 GMT and U.S. West Texas Intermediate (WTI) crude slid $1.56, or 1.4%, to $110.78 a barrel, after both had dropped more than 2% the previous session.

Despite the fall, both benchmarks were headed for their first weekly gain in three weeks. Brent was on track for a 9% jump and WTI on course for a 6% rise, as broader supply concerns sparked by Russia's invasion of Ukraine underpinned the market.

The United States and Britain, both less reliant than the EU on Russian oil, have imposed bans on Russian crude. The EU, which is heavily dependent on Russian oil and gas, faces a bigger dilemma over whether to impose sanctions on the sector.

"As the single largest buyer of Russian oil, the more rapidly Europe seeks to cut Russia's imports, the higher global oil prices will rise," J.P. Morgan analysts said in a note.

OPEC sources said the group's officials believed a possible EU ban on Russian oil would hurt consumers and that the group had conveyed its concerns to Brussels.

With global stockpiles at their lowest since 2014, analysts said the market remained vulnerable to any supply shock.

Concerns were heightened after the Caspian Pipeline Consortium (CPC) terminal on Russia's Black Sea coast stopped exports on Wednesday after being damaged by a major storm.

But exports from the terminal were expected to resume on Friday, using one of three storm-damaged mooring points, Kazakh Energy Minister Bolat Akchulakov said.

Responding to market volatility, the Intercontinental Exchange (ICE) raised margins for Brent futures by 19% for the May contract from Friday, the third rise this year.

Futures margin rates are hiked when markets are volatile and the move makes transactions more expensive because it forces traders to increase the deposit they hold at the exchange for each contract to prove they can deliver on their obligations.

In a bid to ease supply worries, the United States said it was discussing with allies a possible further release of oil from storage. Sources also told Reuters the United States was set to unveil a deal to supply more U.S. liquefied natural gas (LNG) to Europe this year and next.

(Reporting by Sonali Paul in Melbourne and Isabel Kua in Singapore; Editing by Shri Navaratnam and Edmund Blair)

 

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