Oil prices rose on Wednesday in international markets to $117, supported by concerns over supply from Russia following the EU’s agreement to ban the import of Russian oil by ship and the lifting of the lockdown in Shanghai.
In the London market, the price of a barrel for August delivery rose by $1.30 compared to the previous close, to $116.90. It ended trading yesterday down by $2.
Contracts for July delivery expired on Tuesday, closing up by $1.17, at $122.84.
In the American market, a barrel was traded today at a price $1.05 higher, at $115.72.
Market sentiment today was also marked by the agreement of EU leaders to ban the import of Russian oil by ship. It was agreed that EU member states will completely ban the import of 90% of Russian oil by the end of the year. The import of derivatives is to be completely halted within eight months.
The embargo does not cover the import of Russian oil via pipelines, which was a concession made to Hungary, Slovakia, and the Czech Republic, countries that do not have access to the sea.
Although the European ban fuels concerns over supply from Russia, some analysts believe it will not significantly harm Russian exports in the long term.
“We maintain the view that Russia will, over time, manage to redirect most of its exports and limit the maximum impact on Russian production to 1.5 million barrels per day,” estimate analysts at the American investment bank JP Morgan.
Sources told Reuters that Russian oil companies led by Rosneft plan to reopen wells closed due to Western sanctions in June.
Support for prices was also provided by today’s lifting of the lockdown in Shanghai, which will mean stronger Chinese demand for fuel.
However, significant growth was hindered by media reports that some producers are considering the possibility of suspending Russian participation in shaping the production policy of the Organization of the Petroleum Exporting Countries (OPEC) and its allies, as such a move would result in increased supply.
Although no one has formally requested OPEC members to produce more oil to compensate for potential losses of Russian oil, some Gulf countries have begun planning to increase production in the coming months, reported the Wall Street Journal, citing OPEC delegates.
The regular meeting of the oil cartel on production policy is scheduled for Thursday.
A brake on prices was also the data from the Washington government that crude oil production in the U.S. rose by more than three percent in March, reaching its highest level since November, according to a report released on Tuesday.
In a separate report, OPEC announced today that the price of a barrel of oil from its member countries was $122.94 on Tuesday, which means it increased by $2.93 compared to the previous working day.
