After a long period of “stuck” in a sideways trend, the oil market seems ready to break out and return to the upside, especially since the European Union EU has discussed the ban on oil imports. from Russia and the results of the Federal Reserve meeting yesterday.

The EU announcement partly sheds light on the supply factor

Concern about supply shortage is the biggest factor causing WTI world oil price to increase continuously for 5 months. However, since Russia began attacking Ukraine on February 24, the actual supply forecasts in the market have diverged greatly, with estimates of the decline in Russian oil supply ranging from 1 up to 3 million barrels per day.

On the one hand, Russia’s oil exports by sea in April were still higher than at the beginning of the year, especially as Russia is boosting sales to Asian customers such as India and China. These countries are benefiting from the price of Russian oil, which is being sold at a discount of about 30 USD/barrel compared to the benchmark Brent oil price.

Recently, according to information from Reuters news site, Indian refineries are negotiating a 6-month contract to import millions more barrels of oil from Russia. National oil company Indian Oil Corp is said to be offering to import 6 million barrels of oil a month, plus the right to buy another 3 million barrels. This somewhat eases the pressure on Russia even though they risk losing important customers.

Most recently, according to the announcement of the President of the European Commission Ursula von der Leyen, the EU is proposing a ban on oil imports from Russia, including oil transported through pipelines and tankers, crude oil and other products. oil refining products.

This ban is expected to be set up in the sixth package of sanctions, aimed at cutting off Russia’s income, 10 weeks after Russia launched a military operation in Ukraine. The ban is expected to reduce Russia’s main source of income from energy, after the EU instituted a ban on coal imports last month.

Currently, about 2.4 million barrels of oil per day from Russia is still being shipped to Europe. Although according to the plan, Europe will have at least 6 months to prepare, but cutting off the supplier of 40% of the annual oil will certainly create a large shortage for the members of the bloc. Hungary has said it may have to open oil from its reserves, or increase purchases on the international market to replace Russian oil.

According to estimates by research firm Kpler, since energy companies implemented a “self-embargo” of oil from Russia, Russia’s oil production has decreased by about 1 million barrels per day. The official ban, once approved, is likely to reduce Russia’s oil production by another 1 million bpd, bringing the total shortfall to 2 million bpd.

This is the information that helped Brent oil price yesterday 4/5 closed up 4.93% to 110.14 USD/barrel, WTI oil price increased by 5.27% to 107.81 USD/barrel, the highest level in the year. almost 3 weeks. The energy MXV-Index, which measures the price volatility of commodities in the group, increased by 4.2% to 5,514 points, while the trading value of the whole group also reached an impressive 2,300 billion dong.

Fed monetary policy clear after May meeting

The US Federal Reserve’s May policy meeting ended early this morning, with the result of the first 50 basis point interest rate hike since 2000. This is considered the most drastic action. Fed Chairman Jerome Powell’s move to control inflation, which is now at a 40-year high. This was also the first time in two years that Powell spoke directly at the press conference.

The Fed meeting ended without much surprise, with a 50 basis point increase in interest rates in line with market expectations. In addition, the remarks of Fed Chairman Jerome Powell showed that the US central bank is not inclined to raise interest rates by 75 basis points at the next meetings. This alleviates concerns about the Fed being too aggressive in tightening the money supply. Investors gradually reduced their cash holdings and caused capital flows to shift back to financial markets.

Besides, on the issue of tightening the balance sheet, which is currently at a record level of nearly $9 trillion, the Fed decided to cut its bond holdings worth $47.5 billion from June to June. September, then gradually increased to 95 billion USD per month. Thus, with the current expected progress, the money supply of the market will decrease by about 500 billion USD, lower than some forecasts of nearly 1 trillion USD in the market before.

According to the Vietnam Commodity Exchange, so, with the unknowns in the financial market in general and the oil market in particular having been partly clarified, oil prices are likely to get out of the sideways zone and soon set up a new level. establish a new uptrend.

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