Canada has announced late Feb. 28 a ban on the import of Russian oil, making it the first G7 nation to impose an embargo.
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Prime Minister Justin Trudeau said at a press conference "we are announcing a ban on all imports of crude oil from Russia, an industry that has benefited President Putin and his oligarchs greatly," according to the AFP news agency.
Canada imported almost 18,000 barrels of petroleum products from Russia in 2019, making it the country's third-largest foreign supplier after the US and Saudi Arabia, according to the Canadian Association of Petroleum Producers.
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Trudeau's announcement comes after UK Foreign Secretary Liz Truss Feb. 27 floated the idea of G7 countries imposing limits on the amount of oil and gas they can import from Russia as part of a widening raft of economic measures and sanctions in response to the invasion of Ukraine.
"I would support the idea of having ceilings on how much oil and gas is imported from Russia," Truss told Sky News in a television interview.
Truss said this should be part of discussions amongst G7 nations to reduce dependency on Russian oil and gas supplies.
The International Energy Agency will convene its members March 1 for an extraordinary meeting to discuss market stability ahead of a planned meeting of OPEC+ on March 2. Russia's major economic allies in OPEC, Saudi Arabia and the UAE, have avoided condemning the Kremlin's actions in Ukraine. Riyadh has reiterated its support of its OPEC coalition agreement with Moscow.
Buyers of Russian crude on international markets are already looking for alternatives. Finnish refiner Neste said Feb. 28 that due to the "current situation and the uncertainty in the market, Neste has mostly replaced Russian crude oil with other crudes," adding that it was closely monitoring "the development of sanctions and possible counter-sanctions" and preparing "various options in procurement, production and logistics."
Sweden's Preem said it had ceased imports of Russian crude, although it noted that Urals only accounted for 7% of its crude oil purchases.
"It [sanctions] will likely make many buyers more hesitant to purchase Russian oil," said Rick Joswick, head of Global Oil Analytics at S&P Global Platts Analytics. "That will tend to drive down the price of Russian crude oil even more until it ultimately clears outside of its traditional markets in Europe," Joswick said, noting that Urals were already at record discounts to North Sea grades in prior days.
"Another effect is that regular buyers of Russian oil, primarily in Europe, will seek non-Russian alternatives. That will tend to support the price of Brent crude and the broader market," he said.
Crude futures were again up sharply, with May ICE Brent trading at $101.69/b at 1100 GMT, up $3.73/b from the previous settlement. ICE Brent had previously reached an intraday high of $102.32/b in Asian morning trading. April Nymex WTI was at $99.03/b, up $3.46/b, at the same time.