Waiting for clarity on the EU’s oil import embargo

A persistent theme in energy markets is uncertainty about the outlook for the EU’s imports of energy from Russia. It does appear that some sort of embargo of oil imports will be announced, maybe as early as next week. However, this is not new news and is unlikely to spark a renewed surge in oil prices. Meanwhile, there have been no reports of payment problems for natural gas this week, suggesting that Poland, Bulgaria and Finland will be the only European importing countries losing access to Russian gas for now. OPEC+ holds its monthly meeting next week and we expect it to leave policy unchanged. At some point, the group will have to discuss how to manage falling exports from Russia and what it means for OPEC+ production targets. But, so far, the group has shown no inclination to acknowledge the change in Russia’s circumstances. Elsewhere, metals markets will probably take their lead from China PMI readings for May, due mid-week, and China trade data due the following week (9^th June). We expect the PMIs to rebound a little from April lows, which would be positive for metals prices. This will be last Weekly Wrap until Friday, 10^th June as Capital Economics’ London office is closed on 2^nd-3^rd June for the Queen’s Platinum Jubilee celebrations.