Crude oil prices rose above $120 a barrel on Monday as traders await the decision of the European Union (EU) concerning Russian crude oil sanctions.
The brent crude oil, against which Nigerian oil is priced, rose 69 cents or 0.6% to $120.46 a barrel before pulling back slightly to $119.89 at 3:49 pm Nigerian time. While the U.S. West Texas Intermediate grew by 74 cents or 0.7% to $116.41 per barrel.
Oil prices rose ahead of the EU meeting scheduled for today, Monday and Tuesday to discuss the union’s sixth sanctions against Russia for invading Ukraine.
“EU Russian oil import ban is still a work in progress and if it gets over the line this week, expect supplies to tighten again,” said Jeffrey Halley, a senior market analyst at OANDA.
“As such, the risks are now increasing of a move towards the post-Ukraine highs we saw in February.”
According to reports, the union failed to reach an agreement on sanctions against Russian oil on Sunday. However, crude oil experts now expect EU to agree to a sanction package between Monday and Tuesday.
“It’s still quite difficult for the European group to reduce its energy dependency on Russia in the near term. That said, an immediate import ban is less possible, and demand may keep oil prices afloat in the near term,” said Leona Liu, analyst at Singapore-based DailyFX.
Any further ban on Russian oil would tighten a crude market already strained for supply amid rising demand for gasoline, diesel and jet fuel ahead of the peak summer demand season in the United States and Europe.
Underscoring market tightness, the Organization of the Petroleum Exporting Countries and allies including Russia, a group dubbed OPEC+, are set to rebuff Western calls to speed up increases in output when they meet on Thursday. They will stick to existing plans to raise their July output target by 432,000 barrels per day, six OPEC+ sources told Reuters.