The Esso Fawley Oil Refinery, operated by Exxon Mobil, stands in Fawley, U.K., on Thursday, May 14, 2020.
Luke MacGregor | Bloomberg | Getty Images
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.
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. 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.