Oil ETFs fall following EU’s price cap on Russian oil

Friday witnessed losses of both ProShares Ultra Bloomberg Natural Gas and the US Natural Gas Fund by almost 13% and 6.6%, respectively, during midday trading.

Two of the largest energy-focused ETFs, the Energy Select Sector SPDR Fund and the  iShares U.S. Oil & Gas Exploration & Production ETF , both retreated by nearly 1%.

Shares of the ProShares UltraShort Bloomberg Natural Gas, which provides two times the inverse exposure to the performance of a futures contract on natural gas for one day, jumped as high as 14%.

Despite the strong market reaction on Friday, some experts have noted that price caps could have minimal impact on the oil market in the near future. If Russia decides to withhold barrels from the market, then the chances of a price surge go up

According to an EU document with details of the cap, the price limit will be regularly reviewed to analyze effects on the market, but would remain “at least 5% below the average market price.”

“I welcome the EU’s agreement on setting a price cap on Russian oil,” said Estonia’s Prime Minister Kaja Kallas, in a tweet on Friday. “Crippling Russia’s energy revenues is at the core of stopping Russia’s war machine.” Brent Crude, a global price benchmark for Atlantic basin crude oils, slipped 1.8% on the news.