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Oil prices have risen as a result of the EU's ban on most Russian oil imports

Image: Reuters Berita 24 English - Oil prices increased on Tuesday after the EU decided to cut Russian oil imports by the end of 2022, addin...

Image: Reuters

Berita 24 English - Oil prices increased on Tuesday after the EU decided to cut Russian oil imports by the end of 2022, adding to concerns about a tighter market already pressured by rising demand ahead of the peak summer driving season in the United States and Europe.

At 0054 GMT, Brent crude futures for July, which expire on Tuesday, were up 33 cents to $122 a barrel. The August contract, which is the most active, gained 33 cents to $117.93.

WTI crude futures in the United States were trading at $117.31 a barrel, up $2.24 from Friday's finish. Due to a federal holiday in the United States, no settlement was reached on Monday.

Leaders of the European Union have reached an agreement in principle to reduce 90 percent of Russia's oil imports by the end of 2022, breaking a standoff with Hungary over the bloc's strongest sanctions against Moscow since the invasion of Ukraine three months ago.

However, other analysts believe that improvements in oil prices will be limited because the market has already factored in supply constraints.

SPI Asset Management Managing Partner Stephen Innes told Reuters that almost every EU member supported the ban, implying that the market was "already pricing in EU self-sanction and much less Russian oil moving to Europe this year."

"I believe the market is pricing in some additional Asia demand via China; nevertheless, the glaring issues are the increasing gasoline prices at the pump, which might contribute to demand destruction during the driving season," Innes noted.

Following the lifting of COVID-19 restrictions, China's demand is projected to increase. Shanghai's two-month-long lockdown will come to an end on Wednesday, allowing the vast majority of residents in China's largest city to leave their homes and drive their automobiles.

On the production front, OPEC+ is expected to keep to last year's agreement at its meeting on Thursday, with a modest 432,000 barrels per day rise in July, according to six OPEC+ sources, defying Western demands for a faster increase to decrease skyrocketing prices.

The Organization of Petroleum Exporting Countries and its allies, led by Russia, argue that the oil market is stable and that recent price increases are unrelated to fundamentals.

Oil prices have risen by more than 55 percent this year on both sides of the Atlantic, reaching their highest level in almost a decade in 2022.

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