NEW YORK: Oil prices rose to over $115 a barrel on Tuesday, their highest in about seven weeks, supported by the European Union’s ongoing push for a ban on Russian oil imports that would tighten supply.
The easing of China’s COVID-19 lockdowns also supported prices, as investors grew more optimistic about demand from the world’s second-largest economy.
Brent crude rose 91 cents to $115.15 a barrel by 11:11 a.m. EDT (1511 GMT), and U.S. West Texas Intermediate (WTI) crude was 77 cents higher at $114.97 a barrel.
During the session, Brent rose to a session high of $115.69, its highest since March 28, while WTI hit $115.56 per barrel, highest since March 24.
Prices have gained by around 20% since Russia’s invasion of Ukraine in late February, which has scrambled the global energy market as governments and companies sanction Russian energy supplies.
EU foreign ministers failed on Monday in their effort to pressure Hungary to lift its veto on the proposed oil embargo.
But some diplomats now point to a May 30-31 summit as the moment for agreement on a phased ban on Russian oil.
“Oil prices are continuing the trend of wrestling with where alternative supplies are going to come from,” said Andrew Lipow, president of Lipow Oil Associates in Houston.
Further support came from figures showing OPEC and allied nations, which include Russia, in April produced far below levels required under a deal to gradually ease record output cuts made during the worst of the pandemic in 2020.
Meanwhile, non-Russian deliveries into the Polish port of Gdansk hit at least seven-year highs this month, as refiners in eastern Germany and Poland switch away from Russian supply.
“Ultimately, this is a supply-side story,” said Fawad Razaqzada, analyst at City Index. “Unless the OPEC and its allies ramp up production and fast, it is difficult to see how prices can go down meaningfully.”
U.S. industry data on inventories are due later on Tuesday. Weekly inventory reports are expected to show a rise in crude stocks and declines in inventories of distillates and gasoline.
In China, Shanghai achieved on Tuesday its long-awaited milestone of three consecutive days with no new COVID-19 cases outside quarantine zones. However, most residents will have to put up with confinement for a while longer before resuming more normal life.
The commercial hub of 25 million set out on Monday its clearest timetable yet for exiting a lockdown now in its seventh week.