Oil prices rise due to expectations of a market with a tight supply

Oil prices rose on Friday as signs of a tight market pushed prices ahead of the US Memorial Day holiday weekend, the unofficial start of the US summer peak demand season.

In addition, European Union nations are negotiating a deal on Russian oil that would embargo deliveries but delay sanctions on crude shipped by pipeline, to win the vote of Hungary and other landlocked member states, the officials said.

Hungary’s resistance to oil sanctions and the reluctance of a handful of other countries has delayed the application of a sixth package of sanctions by the 27 members of the European Union against Russia for its invasion of Ukraine.

“We believe a sharp contraction in Russian exports could trigger a 1980s-style oil shock and push Brent well above $150 a barrel,” Bank of America said in a note.

Envoys from European Union governments could reach an agreement in Brussels on Sunday, in time for their leaders to approve it at their May 30-31 summit, officials said.

Brent crude rose $2.03, or 1.73%, to $119.43, while US West Texas Intermediate (WTI) crude gained 98 cents, or 0.86%, to $115.07 a barrel.

“The US driving season and strong travel demand should help (prices). With supply growth lagging demand growth, the oil market is likely to remain undersupplied. said UBS analyst Giovanni Staunovo.

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