By Adedapo Adesanya
Brent crude soared by $3.56 or 2.4 per cent to $114.20 per barrel on Monday on optimism that China’s lockdowns are coming to an end and demand concerns will ease.
The piece of information also caused the price of the United States West Texas Intermediate (WTI) crude futures to rise by $4.32 or 3.4 per cent to $113.70 per barrel.
It was reported that Shanghai is witnessing a strong recovery from COVID cases, with plans in place to ease lockdown restrictions beginning this week outweighing the bearish factors for oil.
For nearly six weeks, the government shut down the city but on June 1, Shanghai will remove restrictions after easing gradually them from May 21.
“From June 1 to mid- and late June, as long as risks of a rebound in infections are controlled, we will fully implement epidemic prevention and control, normalise management and fully restore normal production and life in the city,” the deputy mayor of the Chinese financial hub, Mr Zong Ming was quoted.
The announcement comes shortly after downward pressure was put on oil prices over new releases of weak Chinese economic data and signals that the European Union’s plans to ban Russian oil had faltered.
Oil prices also found some support as the EU diplomats and officials expressed optimism about reaching a deal on a phased embargo of Russian oil despite concerns about supply in eastern Europe.
Austria expects the EU to agree on the sanctions in the coming days, according to its Foreign Minister, Mr Alexander Schallenberg on Monday.
Germany’s Foreign Minister, Ms Annalena Baerbock said the bloc would need a few more days to find an agreement.
In order for the proposal to be approved, it will need the support of all member states. Some countries within the 27-member bloc have expressed their opposition to an all-out embargo.
Under the proposal, heavy Russian dependents like Hungary and Slovakia could be granted a longer period to adapt to the embargo, until the end of 2023.
The ban would apply to Russian exports of oil worldwide, potentially affecting the country’s ability to find alternative buyers after the EU stops buying Russian oil.
If agreed, the embargo would follow the United States and the United Kingdom, which have already imposed bans in an attempt to cut one of the largest income streams for the Russian economy.
Analysts noted that with the planned ban by the European bloc on Russian oil and the slow increase in OPEC output, oil prices are expected to stay close to the current levels.
Dipo Olowookere