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- Crude oil prices soared to two-month high on Monday.
- The current surge in oil prices has been witnessed after two consecutive weekly gains.
- China’s economic capital, Shanghai announced to end its two-month-long COVID-19 lockdown from Wednesday.
Crude oil prices surged above US$121/bbl on Monday to reach a two-month high level as, China, one of the biggest consumers of crude oil in the world, has eased down COVID-19 restrictions. The prices also got support on expectations that European Union will eventually ban Russian oil, creating future supply concerns.
The current surge in oil prices has been witnessed after two consecutive weekly gains. Earlier, the gains in crude oil prices came due to the U.S. Memorial Day holiday weekend, the tenure when the country's energy demand peaks.
Additionally, a strong travel demand amid US driving season also drove the fuel demand and eventually buoyed oil prices.
With global supplies lagging to meet rising demand, the oil market is expected to remain in short supply globally.
The prices of both oil benchmarks gained more than 69% in the last one year with WTI crude oil futures gaining as much as 76.66% in the same period.
The prices extended their gains on Tuesday too after the EU agreed to slash oil imports from Russia.
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On Monday, Brent Crude oil settled at US$121.67/bbl, up 1.9%, and WTI crude oil settled at US$117.06/bbl, up 1.7%.
On Tuesday, August delivery Brent Crude oil futures gained and last traded at US$119.88 per barrel up 1.97%, while July delivery WTI crude oil futures exchanged hands at US$119.17 per barrel, up 1.70% at 4:10 PM AEST.
EU’s Russian oil embargo and China’s easing restrictions
Both situations including European Union’s sanction on Russian oil and China’s ease in COVID-19 restriction, equally played a significant role to push the oil bulls.
China’s economic capital, Shanghai announced to end of its two-month-long COVID-19 lockdown, allowing people to leave their homes and drive their cars from Wednesday.
Besides, the members of the EU met this week to discuss the sixth package of sanctions against Russia for its invasion of Ukraine.
A ban on Russian oil would further tighten the crude oil market which is already facing supply challenges amid rising demand for gasoline, diesel, and jet fuel ahead of the peak summer demand season in Europe and the US.
On top of that, OPEC along with its allies including Russia are set to refuse Western calls to speed up increases in output when they meet on Thursday.
Crude oil prices hit two-month highs on Monday, extending last week's rally on prospects of higher demand as China eases lockdown after two months and a potential ban on Russian oil from the European Union.
Here’s how commodities performed in the last week click here
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