At 8 p.m. French time on April 24, with the end of the second round of voting in the 2022 French presidential election, the current president Macron defeated the far-right party candidate Le Pen with a majority of about 58% of the vote and successfully re-elected as president of France.
Earlier, according to Reuters, the European Union will announce a comprehensive embargo on Russian oil after the French election.
French Finance Minister Le Maire said the embargo on Russian oil was being pushed at the EU level, and French President Emmanuel Macron hoped to take such a move. "I hope that in the coming weeks, we will persuade our European partners to stop importing Russian oil." The European Commission is working to speed up the supply of alternative energy sources in an attempt to reduce the cost of banning Russian oil and persuade Germany and other reluctant EU countries to accept the measure.
In her latest report, JPMorgan analyst Natasa Kaneva warned that if Europe adopts a "comprehensive and rapid ban" on Russian crude oil, the loss of crude oil and refined products supply may exceed 4 million barrels per day. By then, Brent crude oil is likely to soar 65% to $185/b. However, if the EU adopts a similar approach to the embargo on Russian coal and phases out Russian crude oil supply in about four months, JPMorgan believes that the price of the crude oil market is not expected to be significantly disrupted.
On the intraday, yesterday's WTI crude oil futures plunged 3.92% during the day. Brent crude fell below $102 a barrel, down 3.49% during the day. On the domestic side, the main crude oil contract in the previous period fell nearly 7% in the afternoon session, fuel oil closed down 4.65%, and low-sulfur fuel oil closed down 3.61%. As of this morning's close, WTI June crude oil futures closed down 3.46% at $98.54/b; Brent's June crude futures closed down 4.06% at $102.32/b, both hitting new lows since last Monday on April 11, the largest closing decline since Tuesday, April 19.
Zheng Mengqi, an analyst at Haizheng Futures, told reporters that the sharp decline in oil prices on Monday was affected by multiple factors:
1. Fed Chairman Jerome Powell said at an IMF panel discussion on Friday that a 50 basis point hike will be discussed at the May rate meeting, and the market is already trading expectations for a 50 basis point consecutive rate hike in May, June and July. The Fed's hawkish remarks have led to a strong upward trend in the dollar index and pressure on commodity prices.
2. In addition to Russia, crude oil production, which was previously interrupted by supply, is also recovering. Libya, for example, said crude oil production, which had previously lost 550,000 bpd due to political instability in the country, would resume within a few days; Kazakhstan's oil production was damaged by a pipeline failure, which fully resumed exports from April 22, with a resumption of production of about 320,000 bpd.
A contract for the sale of 30 million barrels of strategic petroleum reserves (SPR) has been signed in the United States and plans to deliver 50 million barrels of crude oil in May and June. Japan will also auction about 4.8 million barrels of SPR on May 10.
4. Under the Conflict between Russia and Ukraine, the EU's severe sanctions against Russia have not yet been introduced. Recently, the EU said it would soon propose a sixth set of sanctions against Russia, including "some form of oil embargo", measures that could include phasing out Russian oil or imposing tariffs on exports that exceed a certain price cap. Fears of a complete exit from the market for Russian crude supplies in the short term have eased.
5. The domestic epidemic situation is not completely over, and the demand performance is relatively weak. The number of new cases in Shanghai rebounded at the end of last week, the epidemic in Beijing relapsed, local containment measures slowed economic growth, transportation demand fell sharply, and crude oil terminal demand weakened.
Europe "stole a lot of Russian oil from the sky" and stole a lot of russian oil
Although since the outbreak of the Russian-Ukrainian conflict, the European Union has been clamoring for an embargo on Russian energy, it has repeatedly said that it is developing sanctions. But the data shows that although European countries talk about sanctions every day, Russian oil imports continue to rebound, and many traders even buy oil through "gray channels".
According to the Wall Street Journal of the United States, in order to maintain economic operation and prevent further surge in fuel prices, Russian oil imports in The European Union in April rose sharply from the previous month, rising from an average of 1.3 million barrels per day imported in March to 1.6 million barrels. Among them, the import volume of Romania, Estonia, Greece and other countries even doubled last month.
According to data from tanker tracker TankerTracker, russian oil imports from EU member states have risen to an average of 1.6 million barrels per day so far in April, compared with an average of 1.3 million barrels per day in March, as one of the largest buyers of Russian oil.
Simon Johnson, a former chief economist at the International Monetary Fund, noted that Western buyers are buying even more Russian oil than they did before the Russian-Ukrainian conflict.
Not only that, in order to circumvent Western criticism and sanctions, more and more Russian oil is being shipped to "unknown destinations" to mix with oil from other tankers, and many Western traders try to "hide the sky" to buy oil through this method of evading sanctions.
The Wall Street Journal said the amount of oil shipped from Russian ports to "unknown destinations" in April was increasing. Unlike those oils that have a clear destination mark on shipping documents, more than 11 million barrels of oil are unusually loaded onto tankers without a predetermined route. Through this "cross-sea" transshipment operation, Russian oil can be mixed with other oils loaded on board, thus "blurring" the source of oil to avoid sanctions.
Can the EU impose a total embargo on Russian crude oil?
With internal opinions never being harmonized, the EU has until now failed to introduce a ban on Russian oil. The European Commission's executive vice-president told the British newspaper The Times on April 25 that the EU is studying the imposition of "smart sanctions" on Russian oil to achieve "maximum pressure on Russia while minimizing damage to itself".
But the vice-president said the EU had not yet been able to agree on the specifics of sanctions on Russian oil and could take measures such as "phase-out" Russian oil or tariffs on goods that exceeded the price cap. The Wall Street Journal said that it may be a long time before the EU can finalize sanctions, and many industry insiders suspect that oil traders may find a way to circumvent "sanctions" and let oil continue to flow.
Can Europe and the United States completely embargo Russian crude oil, as Reuters said?
In this regard, Zheng Mengqi said that although the EU previously said that paying Russian gas in rubles would violate EU sanctions against Russia, the EU recently said that it would allow the purchase of Russian gas in rubles under "specific conditions". In the EU's upcoming sixth set of sanctions against Russia, it is only "some form of oil embargo" to phase out Russian oil. Therefore, the possibility of a comprehensive EU embargo on Russian crude oil in the short term is relatively low.
"If the EU imposes a total embargo on Russian crude oil as well as natural gas, the problem of energy shortages in Europe will increase, and in the case of a mismatch between supply and demand, crude oil prices will continue to rise." We still need to further track the attitude of all parties to Russian sanctions in the Russian-Ukrainian conflict. Zheng Mengqi said.
In terms of internal trading, Chen Xinnian, an analyst at CITIC Construction Investment Futures, believes that the Russian-Ukrainian conflict and The sanctions imposed by Europe and the United States on Russia are difficult to end in a short period of time, so the main driving factor of crude oil prices in the second quarter is still geopolitics, and it is expected that Russia will expand to 3 million barrels per day in May, the oil supply gap in The oil supply gap with limited growth and low inventories is tight; on the demand side, short-term oil prices will be affected by the bearishness of China's epidemic lockdown measures. Secondly, the Russian-Ukrainian conflict and the domestic epidemic on the economic growth of the expected drag also put pressure on the price above, but the European transport increment can offset the domestic decline, it is expected that the rebound trend of crude oil demand is expected to continue after the end of the Shanghai lockdown measures, so oil prices do not yet have a deep fall basis, crude oil in the second quarter is likely to be wide oscillation, fuel oil unilateral wide oscillation.
Chen Xinnian further analyzed: "For the high and low sulfur price difference, in the short term, with the improvement of the domestic epidemic situation, Shanghai and other cities the blockade measures are completely relaxed, the return of gasoline and diesel consumption to drive the low sulfur fuel crack difference is a high probability event, superimposed high sulfur demand start lag lag, you can pay attention to the strategy of doing more high and low sulfur fuel oil price difference LU-FU. In the medium and long term, it is necessary to grasp the opportunities of the stage. With the passage of time, the advent of the high-sulfur demand season in the third quarter is expected to promote the strengthening of the high-sulfur fuel oil market, and the probability of LU-FU narrowing is larger, while the power generation demand for low-sulfur fuel oil in the fourth quarter and the first quarter of the following year is expected to boost the LU demand side, at this time LU-FU has a greater probability of widening. ”