Oil prices up in early Asian trade on Wednesday after European Union leaders agreed to a partial and phased ban on Russian oil and China closed its COVID-19 lockdown in Shanghai. Brent crude for August delivery was up 78 cents, or 0.7%, at $116.38 a barrel.
The front-month contract for July delivery expired on Tuesday at $122.84 a barrel, up 1%. U.S. West Texas Intermediate (WTI) crude up by 63 cents, or 0.6%, to $115.30 a barrel. Both benchmarks ended the month of May higher, marking the sixth straight month of rising prices.
EU leaders agreed to cut 90% of oil imports from Russia by the end of 2022, the bloc’s toughest sanction on Moscow for its invasion of Ukraine since February. Once adopted, sanctions on crude will be phased in over six months and on refined products for over eight months. The embargo exempts pipeline oil from Russia as a concession to Hungary.
“However, with Germany and Poland already confirmed they won’t be buying Russian oil via pipeline or sea, the total effect would be to cut 90% of Russian crude sales to the EU by this year end,” analysts from ANZ Research said in a note. In China, Shanghai’s COVID-19 lockdown ended at midnight on Wednesday morning after two months, pushing expectations of firmer fuel demand from the country.
However, reports that some producers are thinking of removing Russia’s participation in the Organization of the Petroleum Exporting Countries and its allies (OPEC+) production deal controlled black liquid’s gains. Some Gulf members had begun planning for an increase in output in the next few months, according to the Wall Street Journal.
