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Oil on track for weekly rise on global supply issues

Technicians stand next to an oil rig at an Oil and Natural Gas Corp (ONGC) factory, during a media tour of the factory in the village of Dhamasna in the western state of Gujarat, in India, August 26, 2021. REUTERS/Amit Dave

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  • EU may strike summit deal to sanction Russian oil shipments
  • OPEC+ expected to stick to modest production increase for July, sources say
  • Oil prices up about 50% since the start of the year

LONDON, May 27 (Reuters) – Oil prices rose slightly on Friday and were on track for weekly gains, buoyed by the prospect of a tight market due to rising gasoline consumption in the United States. States in the summer, as well as the possibility of an EU ban on Russian oil.

Brent was up 64 cents, or 0.6%, at $118.04 as of 1338 GMT, and was on track for a gain of around 5% this week.

U.S. West Texas Intermediate (WTI) crude rose 11 cents, or 0.1%, to $114.20 a barrel. WTI is set for a weekly gain of 0.6%.

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“Oil prices hit their highest level since late March, benefiting from further declines in US oil inventories,” said UBS analyst Giovanni Staunovo.

U.S. gasoline inventories (USOILG=ECI) fell 482,000 barrels last week to 219.7 million barrels, the U.S. Energy Information Administration said on Wednesday. The start of the summer driving season in the United States normally brings an increase in fuel consumption.

“The US driving season and strong travel demand should help (prices). With supply growth less than demand growth, the oil market is expected to remain undersupplied. As a result, we remain positive in our outlook for crude prices,” Staunovo added.

The two benchmark raw deals were also backed as the European Commission continued to seek the unanimous backing of all 27 EU member states for its proposed new sanctions against Russia, with Hungary posing a stumbling block.

European Union countries are negotiating a Russian oil sanctions deal that would ban deliveries but delay sanctions on oil delivered by pipeline to reach Hungary and other landlocked member states, officials said. Read more

Hungary’s resistance to oil sanctions – and the reluctance of a handful of other countries – has delayed the implementation of a sixth round of sanctions by the 27-member EU against Russia for its invasion of the EU. ‘Ukraine.

“We believe that a sharp contraction in Russian oil exports could trigger a true 1980s-style oil crisis and push Brent well above $150 a barrel,” Bank of America said in a note.

Oil prices jumped after the 1979 Iranian revolution and a long war between Iran and Iraq (1980-88), although a global recession quickly hampered fuel demand and oil prices fell. fall.

Prices are up about 50% so far this year.

OPEC and its allies, a group known as OPEC+, are expected to stick to last year’s oil production agreement at its June 2 meeting and raise production targets for July of 432,000 barrels per day, six OPEC+ sources told Reuters. OPEC+ members would thus push back on Western calls for a faster rise to curb soaring prices. Read more

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Reporting by Bozorgmehr Sharafedin in London, additional reporting by Stephanie Kelly in New York and Koustav Samanta in Singapore; Editing by Jane Merriman and David Evans

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