Oil prices climb to over 2-month highs ahead of EU meeting on Russia sanctions

Storage tanks are seen at Marathon Petroleum’s Los Angeles Refinery, which processes home & imported crude oil, in Carson, California, U.S., March 11, 2022. Image taken March 11, 2022. Image taken with a drone. REUTERS/Bing Guan/File Photograph

SINGAPORE, Could 30 (Reuters) – Oil costs rose on Monday, hitting their highest in additional than two months, as merchants waited to see whether or not the European Union would attain an settlement on banning Russian oil imports.

The Brent crude futures contract for July, which is able to expire on Tuesday, was up 47 cents, or 0.4%, at $119.90 a barrel at 0659 GMT, after rising as excessive as $120.50 earlier within the session. The August Brent contract , which is extra lively, rose 61 cents, or 0.5%, to $116.17 a barrel.

U.S. West Texas Intermediate (WTI) crude futures jumped 72 cents, or 0.6%, to $115.79 a barrel, extending stable features made final week.

The EU is because of meet on Monday and Tuesday to debate a sixth package deal of sanctions in opposition to Russia for its invasion of Ukraine, actions Moscow calls a “particular navy operation”.

“If we take a look at the current value motion, evidently market has factored in that the European Union might attain a deal on some type of restrictions on Russian crude,” stated Madhavi Mehta, commodity analysis analyst at Kotak Securities.

“We might even see additional upside provided that it’s a full ban. Any watered-down deal or one which incorporates exemptions might not have a lot optimistic affect,” she added.

EU governments did not agree on an embargo on Russian oil on Sunday however will proceed talks on a deal to ban seaborne deliveries of Russian oil whereas permitting deliveries by pipeline, forward of the summit on Monday afternoon, officers stated. learn extra

“It is nonetheless fairly troublesome for the European group to scale back its power dependency on Russia within the close to time period. That stated, an instantaneous import ban is much less potential, and the calls for might preserve oil costs afloat within the close to time period,” stated Leona Liu, analyst at Singapore-based DailyFX.

Any additional ban on Russian oil would tighten a crude market already strained for provide amid rising demand for gasoline, diesel and jet gasoline forward of the height summer season demand season in the US and Europe.

Sky-high refining margins for diesel and gasoline in Europe and the US have despatched costs for some kinds of bodily crude oil to file highs, in line with merchants. learn extra

Underscoring market tightness, the Group of the Petroleum Exporting International locations and allies together with Russia, collectively referred to as OPEC+, are set to rebuff Western calls to hurry up will increase of their additions to grease output once they meet on Thursday. They may follow current plans so as to add 432,000 barrels per day in July, six OPEC+ sources advised Reuters. learn extra

The oil market was additionally on edge after Iran on Friday stated its navy had seized two Greek oil tankers in retaliation for the confiscation of Iranian oil by the US from a tanker held off the Greek coast. learn extra

Crude costs are additionally discovering help from a weaker U.S. greenback, and China’s easing of virus associated restrictions, stated Sunil Katke, head of commodities retail enterprise at Kotak Securities.

A weaker greenback makes oil inexpensive for importers holding different currencies.

Reporting by Sonali Paul in Melbourne and Koustav Samanta in Singapore; Modifying by Kenneth Maxwell and Bradley Perrett

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