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Europe is set to increase its reliance on oil imports from the United States after the EU embargo on Russian seaborne crude imports enters into force in early December, Claudio Descalzi, chief executive of Italy’s energy group Eni, told Bloomberg in an interview on Monday.
The embargo on Russian crude imported by sea kicks in on December 5.
Supply to Europe will decline by around 2 million barrels per day (bpd), Descalzi told Bloomberg on the sidelines of the ADIPEC energy conference in Abu Dhabi. The hit to Europe will be big, Eni’s chief executive added.
The U.S. has been exporting record volumes of crude oil and petroleum products recently, and Europe has become a major destination for American petroleum exports, especially after the Russian invasion of Ukraine.
Europe still imports Russian crude and products, but the looming embargo will shift trade flows.
Still, there are bullish and bearish forces in the oil market currently at play, and those are expected to keep oil prices around $90 per barrel for the rest of the year, Descalzi told Bloomberg.
On the one hand, we have fears of recessions and lockdowns in China, but on the bullish side, the market has to contend with a loss of part of the Russian oil supply and underinvestment in new supply globally, Eni’s CEO said.
Investors, especially those in Europe, are not very keen to invest a lot in oil because of policy uncertainty in the long term, Descalzi told Bloomberg.
OPEC tries to keep oil in the $90 to $100 a barrel range, he added.
Eni’s top executive sees oil prices staying more or less at their current levels by the end of 2022.
Early on Monday, Brent Crude was trading at around $94 a barrel, down by 1.4%, as China is again locking down cities amid a rise in Covid infections.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.
Daily crude oil consumption in the United States during the first 9 months of 2022 averaged 20.6 (mbd) against an estimated daily production of 11.6 mbd.
Moreover, whatever crude the United States is exporting is no more than an exchange between US extra light crude and an equivalent imported volume of heavy and extra heavy crudes like the ones US refineries are tooled to process. They aren’t net exports.
The global oil market can’t replace Russian oil exports now or ever.
Dr Mamdouh G Salameh
International Oil Economist
Global Energy Expert