The European Union (EU) was unable to agree with Hungary on its plans to ban imports from Russia, the world’s second-largest crude oil exporter which invades Ukraine, as oil prices rose on Thursday and continued their cautious rally this week amid signs of tight supply.
Brent crude futures for July delivery rose 40 cents, or 0.35%, to $114.43 a barrel at 0412 GMT.
West Texas Intermediate (WTI) crude futures for July delivery rose 55 cents, or 0.5%, to $110.88 a barrel.
A larger-than-expected drop in US crude inventories during the week of May 20 after increased exports revived the market on Wednesday. Analysts said the inventory drawdown and the possibility of an EU embargo on Russian oil drove prices higher.
The focus on oil markets is at the EU summit next week, where another attempt will be made to reach an agreement across the EU on an embargo on Russian oil.
European Council President Charles Michel said on Wednesday he was confident an agreement could be reached before the council’s meeting on 30 May. However, Hungary continues to block the unanimous support needed for EU sanctions.
Hungary is pressing for around 750m euros ($800m) of support from EU to renovate its refineries and expand the Croatian pipeline in order to stay away from Russian oil.
Even without an official ban, there is much less Russian oil on the market as traders and refiners are in the mode to avoid trouble with crude oil and fuel suppliers.
Analysts pointed out that cargoes from Baltic ports make longer journeys to Asian refineries, while deliveries to the Netherlands and France have almost stopped.
A record 5.2 million barrels per day (bpd) increase in oil production in the United States’ Permian Basin is said to be unlikely to close the 2 million to 3 million barrels per day deficit in Russia.
Still, oil markets are on the rise this week amid the decision to lift the COVID-19 lockdowns in China, which will boost the demand, the Russian oil embargo that the EU insists on, and inflation concerns about slowing global growth.
