Oil prices continued to rise on Tuesday, May 31, after the EU agreed on the sixth package of sanctions against Russia, which includes an oil embargo. This heightened supply concerns in the market amid growing demand ahead of the peak summer driving season in the US and Europe.
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Brent futures for July rose $1.13 to a new two-month high of $122.80 a barrel. Futures for US WTI crude traded at $118.25 a barrel, up $3.18 from Friday’s close. There were no settlements on Monday due to a public holiday in the US. Both benchmarks show daily gains since Wednesday.
European Union leaders have agreed to cut 90% of oil imports from Russia by the end of 2022, ending the stalemate with Hungary over the bloc’s toughest sanctions on Moscow since the invasion of Ukraine three months ago.
“This is definitely very optimistic for the price of oil, given the tight supply. The price of oil is now moving towards March highs,” said Tina Teng, market analyst at CMC Markets. The opening of China is also supporting prices, she said.
Oil prices soared in March to their highest level since 2008 and are up more than 55% this year.
They should receive additional support as demand from China is expected to pick up once COVID-19 restrictions are eased.
Shanghai has announced the end of the two-month lockdown and will allow the vast majority of residents in China’s largest city to leave their homes and drive their cars from Wednesday.
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