The price of Brent crude oil, the international benchmark, has risen above $120 U.S. a barrel as
China eases its recent COVID-19 lockdowns and increases domestic manufacturing.
Brent crude oil rose as high as $120.50 U.S. a barrel, before paring some gains, after the
benchmark jumped more than 6% last week to reach its highest level in two months.
West Texas Intermediate (WTI) crude oil, the U.S. standard, gained 0.5% to reach $115.63 U.S.
a barrel on the New York Mercantile Exchange.
The price hikes come as China’s key industrial hub of Shanghai allowed all manufacturers to
resume operations beginning on June 1, while officials said Beijing’s COVID-19 outbreak is now
under control.
Additionally, the European Union failed to agree on a deal Sunday on a revised sanctions
package that would include a Russian crude oil ban to punish Moscow for its war in Ukraine.
Talks among European nations are scheduled to continue this week.
Hungary is so far refusing to back a compromise deal despite proposals aimed at ensuring its oil
supplies. An EU official said a deal is still possible in the coming days as leaders continue
negotiations.
Brent crude oil is now on track for a sixth straight monthly climb that would be the longest such
run in more than a decade. The advance has been driven by the fallout from war in Europe, as
well as increased demand as more economies return from COVID-19 restrictions.
With a meeting scheduled this week of the Organization of Petroleum Exporting Countries and
its allies (OPEC+) on supply policy, leading member Saudi Arabia is expected to boost its
official prices for this coming July.
The oil market is steeply backwardated, a bullish pattern marked by near-term prices trading at
a premium to longer-dated ones. Brent crude oil’s prompt spread, which is the difference
between its two nearest contract prices, is currently at $3.73 U.S. a barrel, up from $1.34 U.S. a
barrel three weeks ago.
