Oil prices approached 3-week highs
Oil prices soared to almost three-week highs on Monday amid growing fears about a contraction in global supply, as the West raised the possibility of tougher sanctions against Russia, the world's biggest exporter, as the cause of the deepening crisis in Ukraine.
Brent futures rose $1.09, or 1.0%, to $112.79 a barrel at 0445 GMT after hitting $113.80 at the start of the session, the highest since March 30.
West Texas Intermediate futures rose $1.00, or 0.9%, to $107.95 a barrel, having gained to as high as $108.55, the highest since March 30.
Ahead of the Easter weekend, both contracts gained more than 2.5% on the news on Thursday that the European Union will ban oil imports from Russia.
Although the EU has prepared proposals to ban Russian crude, diplomats said Germany does not actively support an immediate embargo.
These comments came before Ukrainian soldiers resisted the Russian ultimatum to lay down arms in Mariupol over the weekend.
Especially in the northern hemisphere, as the driving season approaches and demand is expected to increase, the war between Russia and Ukraine, which continues without any sign of a ceasefire, keeps supply fears hot.
The International Energy Agency (IEA) had warned that around 3 million barrels per day (bpd) of Russian oil would be withdrawn from the market as of May due to sanctions or buyers voluntarily avoiding Russian cargo. According to sources, Russian oil production continued to fall in April and fell 7.5% in the first half of the month compared to March.
It will raise this week, with limited additional supply from major oil producers to offset the declining flow from Russia. Expectations of further tightening in the US oil market due to increased export demand to Europe, while US heating fuel prices are lagging behind the last rally.
The Organization of the Petroleum Exporting Countries (OPEC) and its allies including Russia, rejected Western pressure to increase supply.
An OPEC report released last week showed OPEC production rose just 57,000 bpd to 28.56 million bpd in March, lagging behind the 253,000 bpd increase allowed for OPEC under the OPEC+ deal.
Adding to the crackdown, Libya was said to have stopped oil production from the El Feel oil field on Sunday, and exports were suspended after protesters surrounded the fields and called for Prime Minister Abdulhamid El-Dbeibah to resign.
However, U.S. oil production forecasts are being revised upward despite labor and supply chain constraints, as higher prices spur more drilling and well drilling activity, according to industry experts.
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