Energy Prices Fall As Concerns About Russia's Oil Sanctions Grow

Brent oil futures slid 49 cents, or 0.5 percent, to $100.58 a barrel, while West Texas Intermediate (WTI) crude in the United States sank 20 cents, or 0.6 percent, to $96.03 a barrel. Both benchmarks fell more than 5% in the previous session to their lowest closing levels since March 16.

Josep Borrell, the European Union's top diplomat, warned a NATO summit that fresh EU sanctions, including a ban on Russian coal, may be adopted Thursday or Friday, and the group would next consider an oil embargo.

The coal prohibition, on the other hand, would take effect in its entirety in mid-August, a month later than originally anticipated.

"Nobody wants to take the risk of sanctioning Russian energy, which has been propping up the market," said Bob Yawger, director of energy futures at Mizuho.

India has maintained its purchases of discounted Russian crude oil imports, avoiding the loss of 2-3 million barrels of Russian oil per day expected by experts.

"While such a loss is still conceivable after contracts expire and India's refinery or storage requirements are met, such a scenario is still weeks, if not months, away," said Jim Ritterbusch, president of Ritterbusch and Associates LLC in Galena, Illinois.

Multiple outbreaks of the virus in China have triggered significant lockdowns in the country's largest metropolis, Shanghai.

"The demand situation in China is very dire, even more so now that there is so much fresh supply on the market," said John Kilduff, a New York-based partner at Again Capital LLC.

On Wednesday, member nations of the International Energy Agency (IEA) agreed to release an additional 60 million barrels on top of the 180 million barrels promised last week by the United States to help bring down gasoline prices.

Japan's Kyodo news agency stated that the country would release 15 million barrels of oil from public and private stockpiles.

"While this is the largest release since the stockpile was established in 1980, it will ultimately fail to alter the oil market's fundamentals," ANZ bank stated of the US dump.

According to ANZ, the announcement will likely postpone any producer production rises and may provide OPEC+ with further "breathing space despite requests to expand output further."

Other experts saw the stock market's rebound as a significant relief despite worries about market tightening.

"In light of these volumes, prior fears about supply constraints are no longer warranted, as seen by the price trend," Commerzbank (DE:CBKG) stated, adding that Brent prices had fallen by nearly $12 a barrel since the initial indication of a US release last week.