The oil boosts its gains ahead of G7 talks on Russia's exports
Oil prices boosted their gains on Monday as investors stood on the alert for any moves against Russian oil and gas exports that could stem from a meeting of Group of Seven (G7) leaders in Germany.
As Western states sought to thwart Russia's ability to finance its war in Ukraine, expectations of greater supply shortages emerged in the market as G7 leaders were expected to discuss reviving the Iran nuclear deal, which might lead to the availability of more Iranian oil.
Sources said that the producing countries in OPEC+, which includes Russia, will adhere to the plan for accelerated oil production growth in August when they meet on Thursday.
But for now, immediate supply concerns have outweighed growing concerns about the potential for a global recession following a string of negative US economic data.
Brent crude futures rose 22 cents, or 0.2%, to $113.34 a barrel as of 0342 GMT after a 2.8% recovery on Friday. West Texas Intermediate crude was up 11 cents, or 0.1%, at $107.73 per barrel, after gaining 3.2% in the previous session.
Both contracts posted their second weekly decline last week as interest rate hikes in key economies strengthened the dollar and fueled recession fears.
However, oil prices remained well supported above $100 a barrel, while rapid monthly margins remained broadly in backwardation as supplies of crude oil and its product remained tight.
Backwardation occurs when supply is tight and near-term prices are higher than delivery prices in the coming months.
G7 leaders, who began their meetings on Sunday, are expected to discuss options to tackle rising energy prices, substitute Russia's oil and gas imports without exacerbating inflation, and additional sanctions.
These measures include a possible cap on Russian oil exports to reduce Moscow's revenues and limit damage to other economies. However, it is unclear whether a price ceiling will achieve this result.
A possible reaction is that Russia bans exports of oil and refined products to the G7 economies in response to a price cap that worsens scarcity conditions in global oil and refined product markets.
As European states seek to diversify supply, some of the G7 leaders are pushing for acceptance of the need for new financing for fossil energy investments.
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