News ID: 320972
Published: 0324 GMT April 12, 2022

Oil rises on OPEC warning, easing of Shanghai COVID curbs

Oil rises on OPEC warning, easing of Shanghai COVID curbs

Oil prices climbed on Tuesday as Shanghai's relaxation of some COVID-19 restrictions eased concerns about Chinese demand and as OPEC warned it would be impossible to replace potential supply losses from Russia.

Brent crude futures rose by $3.26, or 3.31%, to $101.74 a barrel at 1002 GMT while U.S. West Texas Intermediate was up $3.01, or 3.19%, at $97.30. Both contracts lost about 4% on Monday, Reuters reported.

Shanghai said on Monday that more than 7,000 residential units had been classified as lower-risk areas after reporting no new infections for 14 days and districts have since been announcing which compounds can be opened up.

The Organization of the Petroleum Exporting Countries (OPEC), meanwhile, warned that it would be impossible to replace seven million barrels per day (mbd) of Russian oil and other liquids exports lost in the event of sanctions or voluntary actions.

The European Union has yet to agree any embargo on Russian oil, but some foreign ministers said the option is on the table.

"The oil market is still vulnerable to a major shock if Russian energy is sanctioned, and that risk remains on the table," wrote Edward Moya, a senior market analyst with OANDA.

IEA member nations are planning to release 240 million barrels over the next six months from May in an effort to calm the market.

While the release will ease immediate tightness, analysts suggested it will not solve the structural deficit caused by underinvestment and stocks will need to be replenished.

 

   
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