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Oil prices rose on Monday to their highest level in more than two months as traders waited to see if the European Union would reach an agreement on a ban on Russian oil imports.
The Brent crude oil futures contract for July, which expires on Tuesday, rose 47 cents, or 0.4%, to $119.90 a barrel at 0659 GMT, after hitting $120.50 earlier in the session.
The more active August Brent contract rose 61 cents, or 0.5%, to $116.17 a barrel.
U.S. West Texas Intermediate (WTI) crude futures jumped 72 cents, or 0.6%, to $115.79 a barrel, extending strong gains made last week.
The EU is due to meet on Monday and Tuesday to discuss a sixth sanctions package against Russia for its invasion of Ukraine, actions Moscow calls a “special military operation”.
“If we look at the recent price movement, it looks like the market has priced in that the European Union may come to an agreement on some form of restrictions on Russian crude,” said analyst Madhavi Mehta. commodities research at Kotak Securities.
“We may only see other benefits if it’s a total ban. Any deal that is watered down or includes exemptions may not have much positive impact,” she added.
EU governments failed to agree on an embargo on Russian oil on Sunday, but will continue talks on a deal to ban maritime deliveries of Russian oil while allowing pipeline deliveries, before Monday afternoon summit, officials said.
“It is still quite difficult for the European group to reduce its energy dependence on Russia in the short term. That said, an immediate ban on imports is less possible, and demands could keep oil prices afloat. short-term,” said Singapore-based DailyFX analyst Leona Liu.
Any further bans on Russian oil would tighten an already tight crude market for supply amid growing demand for gasoline, diesel and jet fuel ahead of the peak summer season in the United States and Europe.
Sky-high refining margins for diesel and gasoline in Europe and the United States have pushed prices for some types of physical crude oil to record highs, traders say.
Underscoring the tightness of the market, the Organization of the Petroleum Exporting Countries and its allies including Russia, collectively called OPEC+, are expected to push back against Western calls to speed up their increases in oil production additions when they meet. of Thursday. They will stick to existing plans to add 432,000 barrels a day in July, six OPEC+ sources told Reuters.
The oil market was also on edge after Iran said on Friday its navy had seized two Greek tankers in retaliation for the United States’ confiscation of Iranian oil from a tanker held off the coast of Greece.
Crude prices are also finding support from a weaker U.S. dollar and China’s easing of virus-related restrictions, said Sunil Katke, head of commodity retail at Kotak Securities.
A weaker dollar makes oil cheaper for importers holding other currencies.
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