The Brent Crude price surged by 0.12% today, Tuesday 17th May 2022 to trade at $114.17per barrel as of the time of writing as the China lockdowns are coming to an end and demand concerns are easing out.
However, this information has also influenced the price of the West Texas Intermediate (WTI) crude futures to rise by 0.04% to $113.98 per barrel as of the time of writing.
Recall, the report on the close of business in China’s commercial hub Shanghai, after the country witnessed a severe COVID-19 pandemic breakout in April.
However, it was reported that Shanghai is witnessing a strong recovery from the COVID cases, with plans put in place to ease the lockdown restrictions since the start of the week yesterday, outweighing the bearish factors for oil.
According to the information revealed by the deputy mayor of the Chinese financial hub, Mr. Zong Ming, Shanghai will remove all lockdown restrictions by June 1 after the gradual easing of the restrictions from May 21. In his words, he quoted that, “From June 1 to mid-and late June, as long as risks of a rebound in infections are controlled, we will fully implement epidemic prevention and control, normalize management and fully restore normal production and life in the city”
This announcement comes shortly after downward pressure was put on oil prices over new releases of weak Chinese economic data and signals that the European Union’s plans to ban Russian oil had abated.
Oil prices also found some support as the EU diplomats and officials expressed optimism about reaching a deal on a phased embargo of Russian oil despite concerns about supply in Eastern Europe.
However, Austria’s Foreign Minister, Mr. Alexander Schallenberg, on Monday stated that Austria expects the EU to agree on the sanctions in the coming days.
Germany’s Foreign Minister, M.s Annalena Baerbock has noted that the EU would need a few more days to reach an agreement, putting into consideration the expressions of the 27-member bloc countries on the all-out oil embargo on Russia.
She added that the proposal will consider heavy Russian dependents like Hungary and Slovakia to be granted a longer period to adapt to the embargo, until the end of 2023. As the ban would apply to Russian exports of oil worldwide, potentially affecting the country’s ability to find alternative buyers after the EU stops buying Russian oil.
Nevertheless, if the proposal is agreed upon, the embargo would follow the United States and the United Kingdom, which have already imposed bans in an attempt to cut one of the largest income streams for the Russian economy.
Analysts forecast that with the planned ban by the European bloc on Russian oil and the slow increase in OPEC output, oil prices are expected to stay close to the current levels.