In weeks prior, the EU sanctioning Russian oil “seemed unrealistic given their reliance on Russian energy supply,” said Rohan Reddy, a research analyst at Global X Management, a firm that manages $2 billion in energy-related assets. If sanctions were instilled, “it would basically shave off a full 4-5% of global oil supply,” as “Europe bought up around 40-45% of Russia’s total oil production in 2021.”

The global oil market has been thrown into turmoil by Russia’s invasion of Ukraine, with the U.S. and Europe imposing sanctions on Moscow and crude buyers shunning the country’s cargoes. Brent neared $140 a barrel earlier this month to hit the highest since 2008, before seeing a massive pullback that briefly put the market into bear territory. Prices have seen unprecedented volatility, with frequent intraday swings of about $10 and broader commodity markets seizing up amid a widespread liquidity crunch.

The rally in oil prices has spurred importing nations to pressure other producers to step up supply, including members of the Organization of Petroleum Exporting Countries. During the weekend, Japan urged the United Arab Emirates to increase exports. Meanwhile, oil giant Saudi Aramco plans to raise spending as it seeks to boost output.

Saudi Arabia said it cannot be held responsible for any drop in oil output if it doesn’t get more help to deter attacks from Yemen. Yemen’s Houthi rebels attacked at least six sites across Saudi Arabia late Saturday and early Sunday, including some run by Aramco. Saudi Arabia has been facing calls from oil-consuming nations such as the U.S. to increase supply output.

Eoin Treacy's view

Cutting demand for oil is not easy. It doesn’t usually happen by choice. Prices rise to a point where it is unaffordable and demand falls. That usually means a recession. Therefore, any effort to manage prices must rely on increasing supply.
The Oil Services ETF broke out of its base formation earlier this month and found at least a short-term low last week. A sustained move below $250 would be required to question medium-term recovery potential.

Saudi Arabia has been disappointed with the lack of help it has received in dealing with rocket attacks from Yemen. They are certainly going to ask for more assistance now and might even get it if it means oil price appreciation has any chance of being held in check.

This seems like an ideal time for any portion of the oil sector to ask for its heart’s desire. The Keystone Pipeline cancellation occurred in the first days of the new Biden administration so it is now likely back under discussion. Drilling on federal land was also banned in the first days of the administration and is also likely back on the table.
Brent crude oil continues to rebound from the psychological $100 area and a sustained move below that level would be required to question the higher for longer hypothesis.
Devon Energy remains in a consistent uptrend, with a succession of ranges one above another.

So is EOG Resources.

Shell is back testing the 2000p level and the recovery remains consistent.
Urals Medium Crude is trading at a $20 discount to Brent. Countries like India are actively securing supply to contain domestic inflation. Russia’s oil will find a home. It might reach its destination by a circuitous route but the discount is a power incentive for importers to look past Russia’s aggression in Ukraine and particularly when they do little trade with the country.