LONDON: Oil prices climbed on Tuesday as Shanghai’s relaxation of some Covid-19 restrictions eased concerns about Chinese demand and as Opec warned it would be impossible to replace potential supply losses from Russia.
Brent crude futures rose by $5.51, or 5.6 per cent, to $103.99 a barrel by 1343 GMT while US West Texas Intermediate was up $5.12, or 5.4 per cent, at $99.41. Both contracts lost about 4 per cent on Monday.
Earlier, Opec told the European Union that current and future sanctions on Russia could create one of the worst ever oil supply shocks and it would be impossible to replace those volumes, and signalled it would not pump more.
European Union officials held talks in Vienna with representatives of the Organisation of the Petroleum Exporting Countries amid calls for the group to increase output and as the EU considers potential sanctions on Russian oil.
“We could potentially see the loss of more than 7 million barrels per day (bpd) of Russian oil and other liquids exports, resulting from current and future sanctions or other voluntary actions,” Opec Secretary General Mohammad Barkindo said, according to a copy of his speech seen by Reuters.
“Considering the current demand outlook, it would be nearly impossible to replace a loss in volumes of this magnitude.” The European Union reiterated its call in the meeting for oil-producing countries to look at whether they can increase deliveries to help cool soaring oil prices, a European Commission official said.
EU representatives also pointed out that Opec has a responsibility to ensure balanced oil markets, the official said.
Opec has resisted calls by the United States and the International Energy Agency to pump more crude to cool prices, which reached a 14-year peak last month after Washington and Brussels imposed sanctions on Moscow following Russia’s invasion of Ukraine. — Reuters