Oil prices rose on Tuesday over easing demand fears after China relaxed strict lockdown measures and OPEC signaled the severity of supply risks if Russian oil is fully banned.
International benchmark Brent crude traded at $101.28 per barrel at 0716 GMT for a 2.84% increase after closing the previous session at $98.48 a barrel.
American benchmark West Texas Intermediate (WTI) cost $96.88 per barrel at the same time for a 2.74% gain after the previous session closed at $94.29 a barrel.
China on Monday eased a citywide lockdown in Shanghai which had been in place for 14 days. A three-tier disease control system was introduced, allowing residents in areas where no cases had been reported for 14 days to leave their homes.
Hopes that demand will turn to normal in China’s most populous city of 28 million residents supported the upward price trend.
Since the beginning of the tension between Russia and Ukraine on Feb. 24, EU countries have considered a ban on Russian oil and gas exports. However, Europe’s high dependency on Russian fossil fuels has made the decision difficult for most members of the bloc.
The EU has agreed to ban Russian coal and Lithuania has become the first country to abandon the use of Russian gas.
Australia, Britain, Canada and the US have implemented total prohibitions on purchases of Russian oil. However, the EU is still unable to agree on an embargo, with Germany warning against making any hasty decision that could push the economy into recession. Others, like Hungary, oppose the ban.
Speaking at a meeting with EU officials, OPEC Secretary-General Mohammad Barkindo warned the bloc that current and future sanctions on Russia could create one of the worst ever oil supply shocks which could leave a supply gap that would be impossible to replace.
However, the plan of the International Energy Agency (IEA) last week to release the second batch of oil from member countries’ emergency reserves hopes to alleviate supply concerns and relieve prices.
On March 1, the IEA announced a plan to release about 62.7 million barrels which were then followed on Thursday with a further release of 120 million barrels.
The US is the largest contributor to both releases. Earlier in April, US President Joe Biden also announced the release of 180 million barrels, or 1 million barrels per day for six months, to drive down prices at the pump and 'ease the pain that families are feeling.'
By Sibel Morrow