Oil prices at seven-week high as push for Russian ban intensifies

London — Oil hit its highest in seven weeks on Tuesday, supported by the EU’s ongoing push for a ban on Russian oil imports that would tighten supply and as investors focused on higher demand from an easing of China’s Covid-19 lockdowns.

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.

Brent crude rose as high as $115.14, its highest since March 28, and by 8.15am GMT was up 46c, or 0.4%, to $114.70. US West Texas Intermediate (WTI) crude slid 26c, or 0.2%, to $113.94.

“Oil prices have remained near multi-week highs this week, supported by surging gasoline and distillate prices in the US, and fears around an EU ban on Russian oil imports remaining in play,” said Jeffrey Halley, analyst at brokerage Oanda.

Crude has surged in 2022, with Brent hitting $139, its highest since 2008, in early March as Russia’s invasion of Ukraine exacerbated supply concerns.

Oil also gained support on Tuesday from hopes of demand recovery in China as it looks to ease Covid-19 restrictions that have hurt its economy.

On Tuesday achieved the long-awaited milestone of three consecutive days with no new Covid-19 cases outside quarantine zones and set out on Monday its clearest timetable yet for exiting a lockdown now in its seventh week.

Further supporting prices was the “intensifying geopolitical tension” between the EU and Russia as Sweden and Finland seek to join Nato, CMC Markets analyst Tina Teng said.

Also in focus are potential further declines in US fuel inventories. Weekly inventory reports are expected to show a rise in crude stocks and declines in inventories of distillates and gasoline.

The first report, from the American Petroleum Institute is due at 8.30pm GMT. 

Reuters