Oil Up as China Ends Shanghai Lockdown and EU Agrees on Phased Russian Oil Ban

© Reuters.

By Gina Lee

AiVIF.com – Oil was up on Wednesday morning in Asia after China ended a lockdown in Shanghai and European Union (EU) leaders agreed on a partial and phased Russian oil ban.

Brent oil futures rose 0.24% to $115.88 by 11:58 PM ET (3:58 AM GMT) and crude oil WTI futuresjumped 0.26% to $114.97. Both marked the sixth straight month of rising prices.

EU leaders agreed to cut 90% of oil imports from Russia by the end of 2022, the bloc’s toughest sanction on Moscow for its invasion of Ukraine since February 24. Once adopted, sanctions on crude will be phased in over six months and on refined products for over eight months.

“However, with Germany and Poland already confirmed they won’t be buying Russian oil via pipeline or sea, the total effect would be to cut 90% of Russian crude sales to the EU by year’s end,” ANZ Research analysts said in a note.

Pushing oil prices higher, the Chinese city of Shanghai ended its lockdown on June 1, leading to the expectations of higher fuel demand in the world’s largest oil importer.

However, reports that some producers are thinking of suspending Russia’s participation in the Organization of the Petroleum Exporting Countries and allies (OPEC+) production deal capped black liquid’s gains.

Some Gulf members had begun planning for an increase in output in the next few months, according to the Wall Street Journal.

“The anticipation of more supply hitting the market, even after cutting Russia out, could be fueling some of this sell-off as oil gave up its post-EU embargo bounce,” SPI Asset Management managing partner Stephen Innes said in a note.

Investors now await U.S. crude oil supply from the American Petroleum Institute, due later in the day.