London — Oil prices rose on Monday as Iranian nuclear talks appeared to hit obstacles and an embargo on Russian oil shipments loomed, with tight supply struggling to meet still robust demand.
Brent crude futures rose 92c, or 1%, to $93.76 a barrel by 9.10am GMT. US West Texas Intermediate crude was up 71c at $87.50 a barrel, or 0.8%.
Prices were little changed last week as gains from a nominal supply cut by Opec+ were offset by lockdowns in China, the world’s top crude importer.
France, Britain and Germany on Saturday said they had “serious doubts” about Iran’s intentions to revive a nuclear deal, in a development that might keep Iranian oil off the market and keep global supply tight,
Global oil prices may rebound towards the end of 2022 as supply is expected to tighten further when a EU embargo on Russian oil take effect on December 5.
The G7 will implement a price cap on Russian oil to limit Russia’s lucrative oil export revenue following its invasion of Ukraine in February, and plans to take measures to ensure that the oil could still flow to emerging nations.
In more bearish news for markets, China’s oil demand could contract for the first time in two decades this year as Beijing’s zero-Covid-19 policy keeps people at home during holidays and reduces fuel consumption.
“The lingering presence of headwinds from China’s renewed virus restrictions and further moderation in global economic activities could still draw some reservations over a more sustained upside,” said Jun Rong Yeap, market strategist at IG.
Also, the European Central Bank and the Federal Reserve are prepared to increase interest rates further to tackle inflation, which could lift the value of US dollar against currencies and make dollar-denominated oil more expensive for investors.