Oil prices recovered on Monday as supply concerns persisted after Washington imposed two rounds of sanctions in the past two weeks on Russia’s energy sector over the war in Ukraine.
Brent oil futures rose 34 cents, or 0.4%, to $81.13 a barrel by 0042 GMT after closing 0.62% lower the previous session.
The West Texas Intermediate contract, which expires Tuesday, was at $78.47 a barrel, up 59 cents, or 0.8%, after falling 1.02% on Friday. The more active April contract rose 36 cents to $77.75 a barrel.
Both contracts gained more than 1% last week, their fourth consecutive weekly gain, after the Biden administration sanctioned more than 100 Russian oil tankers and two oil producers. That led to a rush by major buyers China and India to quickly secure oil cargoes and a global rush on ships, with Russian and Iranian oil traders seeking unsanctioned tankers to carry their cargo.
The new sanctions are expected to reduce supply, at least in the short term, analyst Tim Evans said in his Evans on Energy newsletter.
“Rising tanker rates on unladen vessels and widening crude oil schedule gaps were among the notable knock-on effects, heightening concerns over supplies,” he said.
-The term “backwardation” refers to a market structure in which short-term prices are higher than those in future months, indicating that supply is limited.
The monthly Brent spread widened 2 cents to $1.24 per barrel on Monday, while the WTI spread was 66 cents per barrel, up 17 cents.
The easing of tensions in the Middle East limited oil’s gains.
Hamas and Israel exchanged hostages and prisoners on Sunday, marking the first day of a ceasefire after 15 months of war.
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