Crude oil hovers below $100/b amid lack of energy sanctions

Crude oil futures were trading slightly lower in late European morning Feb. 25 as the newly announced Western sanctions did not directly target energy exports of oil, gas and refined products from Russia.

At 11.43 am London time (1143 GMT), the ICE April Brent futures contract was down 96 cents/barrel from the previous close at $98.14/b, while the NYMEX April WTI crude contract was falling 61 cents/b to $92.20/b.

"We have seen the markets settled down after the spike we had yesterday...the main negative driver today is the lack of sanctions that could impact flows of commodities in particularly gas and oil," Ole Hansen, head of commodity strategy at Saxo Bank, told S&P Global Platts on Feb. 25.

"In the short term, medium term, we are still faced with an oil market that is tight and will remain tight, and the risk of potential new sanctions will keep market worrying," he also said, adding that the market was not willing to keep short positions over the weekend.

"It is a very fluid situation...The only thing we can be sure about is that volatility will remain high for the foreseeable future."

Crude futures settled below the $100/b mark on Feb. 24, having hit an intraday high of $105.79/b, the highest level since August 2014, after US President Joe Biden said there are currently no plans to target Russia's energy complex with sanctions.

Meanwhile, European Union has approved a preliminary package of sanctions against Russia that will target the country's oil refining and transport sectors, European Commission President Ursula von der Leyen said Feb. 25.

The announcement followed a special meeting of the European Council Feb. 24 in response to Russia's invasion of Ukraine.

"We will hold the Kremlin accountable. The package of massive and targeted sanctions European Leaders approved tonight clearly demonstrates that," von der Leyen said in a statement.

"The second main pillar targets the energy sector. A key economic area, which especially benefits the Russian state. Our export ban will hit the oil by making it impossible for Russia to upgrade its oil refineries, which gave Russia export revenues of Eur24 billion [$26.8 billion] in 2019," she said.

The EU will also ban the sale of all aircraft, spare parts and equipment to Russian airlines.

The EU's measures were closely coordinated with its allies including the US, UK, Canada, Norway, South Korea, Japan and Australia, she said. The package of measures was expected to be approved by EU foreign ministers later Feb. 25.