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The price of oil is rising ahead of an EU conference on Russia sanctions

Image: Reuters Berita 24 English -Oil prices climbed to two-month highs on Monday as traders awaited word from the European Union on whethe...

Image: Reuters

Berita 24 English -Oil prices climbed to two-month highs on Monday as traders awaited word from the European Union on whether it would agree to ban Russian oil ahead of a meeting on a sixth round of sanctions on Russia for its invasion of Ukraine.

At 0111 GMT, Brent crude futures were up 46 cents, or 0.4 percent, to $119.89 a barrel, while WTI crude futures were up 60 cents, or 0.5 percent, to $115.67 a barrel, extending significant gains from last week.

On Monday and Tuesday, the EU will discuss a sixth set of penalties against Russia for its invasion of Ukraine, which Moscow describes as a "special operation" to disarm its neighbor.

"I don't think it's a stretch to believe that speculators are preparing for a post-EU summit oil market bounce," said Stephen Innes, managing partner of SPI Asset Management.

Any additional sanctions against Russian oil would squeeze an already tight crude market, which is already strained by increased demand for gasoline, diesel, and jet fuel ahead of the high summer demand season in the US and Europe.

Officials indicated that while EU nations failed to agree on an embargo on Russian oil on Sunday, talks on a compromise to block seaborne deliveries of Russian oil while permitting pipeline deliveries will continue ahead of the summit on Monday afternoon.

If a deal is reached, Hungary, Slovakia, and Czechia will be able to continue receiving Russian oil through the Druzhba pipeline for a period of time until alternative supplies can be negotiated.

The Organization of the Petroleum Exporting Countries and its allies, including Russia, are expected to reject Western proposals to increase oil output significantly when they meet on Thursday, underscoring market tightness. Six OPEC+ sources told Reuters that they will maintain to their aim of adding 432,000 barrels per day in July.

The oil market was also on edge after Iran announced on Friday that its navy had detained two Greek oil tankers in response for the United States seizing Iranian oil from a vessel off the coast of Greece.

"This raises the risk of more disruptions to oil flows through the Strait of Hormuz, which carries a third of global trade," according to ANZ Research analysts.

Oil prices were also boosted by a drop in the US dollar, as investors reduced their expectations for rapid US rate hikes and fears of a worldwide recession faded. For importers holding other currencies, a weaker dollar lowers the cost of oil.

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