Oil prices firmed today after European Union leaders agreed to a partial and phased ban on Russian oil and as China ended its Covid-19 lockdown in Shanghai.
Brent crude as up $1.30, or 1.1%, at $116.90 a barrel today. U.S. West Texas Intermediate (WTI) crude rose $1.05, or 0.9%, to $115.72.
Both benchmarks registered gains over May, marking the sixth month of rising prices in a row.
"The mood on the oil market is seemingly turning ever more bullish," said Julius Baer analyst Norbert Rucker. "Europe's embargo and China's partial reopening is fuelling supply fears and lifting oil prices."
EU leaders agreed in principle on Monday to cut 90% of oil imports from Russia by the end of this year, the bloc's toughest sanctions yet since the start of the invasion of Ukraine, which Moscow calls a "special military operation".
Once fully adopted, sanctions on crude will be phased in over six months and on refined products over eight months. The embargo exempts pipeline oil from Russia as a concession to Hungary and two other landlocked Central European states.
"We maintain our view that, given time, Russia will be able to redirect most of its exports and peg maximum impact on Russian production at 1.5 million barrels per day," JP Morgan said in a note today.
Sources told Reuters that Russian oil companies led by Rosneft this month plan to re-open wells that they had shut owing to Western sanctions.
In China, Shanghai's strict Covid-19 lockdown ended today after two months, prompting expectations of firmer fuel demand from the country.
Capping gains were reports that some producers were exploring the idea of suspending Russia's participation in a an OPEC+ production deal on expectations such a move would increase supply.
OPEC+ comprises members of the Organization of the Petroleum Exporting Countries and their allies. The group is due to meet tomorrow to set policy.
While there was no formal push for OPEC countries to pump more oil to offset any potential Russian shortfall, some Gulf members had begun planning an output increase sometime in the next few months, the Wall Street Journal reported, citing OPEC delegates.
US crude oil production rose in March by more than 3% to its highest since November, a US Energy Information Administration report showed this week.
Analysts polled by Reuters expected US crude oil inventories to have fallen last week while gasoline and distillate stockpiles were expected to have increased. Official government data is expected later today.