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Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 54.76% of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
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Crude Oil hits a two-month high as the EU agrees to enforce the ban on Russian oil importations

Crude oil prices retested its two-month high at $116 on Tuesday during the Asian session. The European Union imposed an embargo on Russian oil imports into Europe, marking the sixth global sanction placed on Russia for attacking Ukraine. On Monday, the European Council President - Charles Michael- made known recent developments. He tweeted from the European leaders' summit meeting in Brussels that the EU has finally agreed to ban Russian oil imports. This ban, according to him, "immediately covers more than 2/3 of oil imports from Russia". He described the purpose for this as "cutting a huge source of financing for its war machine."

The EU leaders look forward to cutting off 90% of oil imports from Russia before this year, with exemptions made for Hungary. This landlocked country depends heavily on crude oil from Russia and a few other countries.

This decision is undoubtedly set to create more scarcity of crude oil in the coming months. Russia is today known as the third global oil dealer, supplying over 40% of the total oil used in Europe daily.

The market bulls reacted by pushing crude oil prices to a new ATH at $116.7 during the Asian session today.

What are the major crude oil price factors?

Supply and Demand

Like every other commodity, crude oil trading is subjected to the principles of supply and demand. When the suppliers are limited, there is likely to be high demand leading to high prices. This is undoubtedly the immediate impact to expect in the market this month following the embargo placed on Russia by the EU. Thus, we might see oil prices revisit their ATH at $121 and even exceed it.

Economic Growth

Improved economic engagements can drive up the demand for crude oil just as slowdowns tend to lower demand and prices. Thus the easing of the lockdown in China and the return to economic activities have created more demand for crude oil. And with the supply getting limited when there are high global demands, we can expect Crude oil prices to skyrocket in the coming months.

Last Updated: 31/05/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

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