Price of Crude Jumps as EU Foolishly Doubles Down On Sanctions
Oil embargo image from NICOLAS MAETERLINCK/ZUMA PRESS via Wall Street Journal.
The Wall Street Journal reports European Union Pledges to Curb Oil Purchases From Russia
The results were as expected in this corner: Oil Jumps as EU Commits to Partial Russian Crude Ban
Crude prices rallied after EU leaders said for the first time that they would impose an oil embargo on Russia over its invasion of Ukraine. The embargo would include an exemption for oil delivered from Russia via pipelines, an amount that makes up one-third of EU oil purchases from Russia.
Futures for Brent crude, the global benchmark, rose 1.6% to $119.52 a barrel. West Texas Intermediate, the U.S. marker, rose 3.4% to $119 a barrel, playing catch-up after the market was closed Monday.
This nonsensical idea was the subject of a Tweet thread yesterday involving Jeremy Warner, Associate Editor, The Daily Telegraph, and me.
Unworkable Carve Out
"Good Lord, look at the damn results. Yet fools want more of it."
Boots on the Ground?
Existing Supply Chain
Proposed Supply Chain for Oil and Gas
Best We Can Get!?
Reuters reports 'Best We Could Get': EU Bows to Hungarian Demands.
European Union leaders handed Hungary concessions to agree an oil embargo on Russia over its invasion of Ukraine, sealing a deal in the wee hours on Tuesday that aims to cut 90% of Russia's crude imports into the bloc by the end of the year.
By making a promise that the EU's embargo excludes the pipeline that landlocked Hungary relies on for Russian oil, the bloc aims to reduce Moscow's income to finance the war it launched more than three months ago in Ukraine.
"It's a fair compromise ... this was the best we could get," Estonian Prime Minister Kaja Kallas told reporters as she arrived for the second day of an EU summit, where leaders will now discuss ways to mitigate soaring energy prices.
Oil prices extended a bull run after the EU's agreement, stoking concern about inflation, which was ran at a record high of 8.1 percent year-on-year in euro zone countries this month, Eurostat said on Tuesday.
Best We Can Get!?
"This is surely unworkable - a carve out for Hungary, which allows its refineries to enjoy sky rocketing margins on sales elsewhere in the EU because of their access to Russian crude. It's almost laughable," said Jeremy Warner.
It seems the carve out for Hungary was "workable" after all, with predictable results.
Russia, China, Hungary, and energy producers are the beneficiaries of these terribly counterproductive sanctions.
This is my "Hoot of the Day" but it's early. I may easily need bonus hoots.
Guilty Meets Guilty
Later today, president Biden will meet Fed Chair Jerome Powell to discuss the economy and inflation. Consider it a case of "Guilty Meets Guilty".
For discussion, please see In a Rare White House Meeting, Biden Meets Powell to Discuss Inflation (Guilty Meets Guilty)
It seems they forgot to invite the EU and UK.