Oil price surge: North Sea fields return to production as cost for crude surges to $111

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For both brands this was the first weekly rise of April 2022 as prices remain the most volatile since June 2020 when much of the world was in lockdown, severely reducing demand.

It comes as North Sea firm IOG has seen its shares rise by 4 percent as it restarted production in the Blythe field as the UK looks at alternatives to expensive imported oil.

IOG has been able to capitalise on the strong rise in gas prices that accompanied the recovery from the pandemic as demand has largely outstripped supply.

This gained renewed momentum after Russia attacked Ukraine.

According to The New York Times, the European Union is moving toward adopting a phased-in ban of Russian oil, to give Germany and other countries time to arrange alternative suppliers.

Andrew Lipow of Lipow Oil Associates in Houston said that a phased-in ban would force European buyers to “seek alternative sources, some of which in the near term is being met by Strategic Petroleum Reserve releases, but in the future, more supplies coming out of the ground will be required”.

This is seen as more realistic than Brussels imposing an immediate oil embargo on Moscow as Washington has done.

Unlike the US, the EU does not have extensive reserve oil supplies which can be utilised with some member states such as Germany and Hungary reliant on Russian oil supplies. 

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However, any talk of an embargo from the EU is likely to make investors nervous as it is likely to raise anxieties that have reached fever pitch since the Russian invasion of Ukraine began in February.

This has caused oil prices to be extremely volatile with prices reaching a peak of $140 a barrel (£107) at one point.

A phased-in ban would calm investors’ nerves to a degree in the short term but questions will remain about what alternative sources EU member states might turn to.

At the same time, the International Energy Agency had warned on Wednesday that roughly 3 million barrels per day of Russian oil could be shut in from May onwards due to sanctions or buyers voluntarily shunning Russian cargoes. 

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US oil production forecasts are being revised upwards despite labour and supply chain constraints as higher prices encourage more drilling and well completion activity, according to industry experts.

The US Energy Information Administration reported on Wednesday that US oil stocks rose by more than 9 million barrels last week, driven partly by releases from strategic reserves facilitated by the Biden administration.

In terms of demand, there are concerns as Chinese refiners are s set to cut orders of crude oil by around 6 percent due partly to recent coronavirus lockdowns in various cities such as Hong Kong and Shanghai.



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