By Gina Lee
Investing.com – Oil was up on Monday morning in Asia, hitting two-month highs as investors wait and see if the European Union (EU) can reach an agreement on a sixth package of sanctions against Russia for its war in Ukraine.
Brent oil futures rose 0.73% to $116.40 by 12:08 AM ET (4:08 AM GMT) and WTI futures rose 0.85% to $116.05, extending the previous week’s gains.
The EU will meet on Monday and Tuesday to discuss a sixth package of sanctions against Russia for its invasion of Ukraine on Feb. 24.
“I don’t think it would be a stretch to assume that speculators are positioning for a post-EU summit oil market bounce,” SPI Asset Management managing partner Stephen Innes told Reuters.
Further sanctions on Russian oil would lead to tight supply amid rising demand for gasoline, diesel, and jet fuel ahead of the peak summer demand season in the U.S. and Europe.
EU governments were unable to agree on an embargo on Russian oil on Sunday but will continue talks on a deal to ban seaborne deliveries of Russian oil while allowing deliveries by pipeline, ahead of a summit on Monday afternoon, according to officials.
Should a deal be reached, it would allow Hungary, Slovakia, and Czechia to continue to receive their Russian oil via the Druzhba pipeline until alternative supplies can be arranged.
Also adding to a tight market, the Organization of the Petroleum Exporting Countries and allies (OPEC+), which includes Russia, are set to rebuff Western calls to increase their oil output additions when it meets on Thursday. The cartel will stick to its plan to add 432,000 barrels per day in July 2022, six OPEC+ sources told Reuters.
Iran said on Friday that its navy had seized two Greek oil tankers in retaliation for the confiscation of Iranian oil by the U.S. from a tanker held off the Greek coast, which put the market on edge.
“This raises the specter of further disruptions to oil flows through the Strait of Hormuz, which carries a third of the world’s trade,” ANZ Research analysts said in a note.
The dollar was also on a downward trend, which also gave the black liquid a boost, and investors are scaling back expectations for aggressive U.S. rate hikes, and fears eased about a global recession.