VINACHEM

Oil prices rose sharply in Asian trade on Monday after increased military action between Russia and Ukraine and reports of more U.S. sanctions on Moscow largely offset a production hike by the OPEC+.

Ukraine launched a large-scale drone attack on Russia over the weekend, retaliating against Russian aggression seen last week but further undermining upcoming ceasefire talks.

Separately, Bloomberg reported that there was a bipartisan push in U.S. Congress to impose more sanctions on Russia’s oil industry, this time pressuring major buyers such as China and India.

The prospect of more sanctions points to tighter supplies, which helped markets look past an output hike by the Organization of Petroleum Exporting Countries and allies (OPEC+), which was considered to be in line with expectations.

Brent oil futures for August rose 2.3% to $64.23 a barrel, while West Texas Intermediate crude futures rose 2.4% to $61.23 points by 21:37 ET.

US Congress considering more Russia sanctions amid Ukraine escalation

Bloomberg reported that Republican Senator Lindsey Graham, along with Democrat Richard Blumenthal, were backing a bill to impose more sanctions on Russia’s energy industry.

The new measures will be aimed at pressuring top buyers China and India from purchasing discounted Russian crude, and propose a 500% tariff on imports from countries that purchase Russian oil.

Such a move stands to severely crimp global oil supplies, given that China and India are major buyers of Russian oil, and will have to look to other sources for oil, potentially at higher prices.

The bill is also likely aimed at further pressuring Russia into a ceasefire with Ukraine, as tensions between the two worsened amid middling U.S. efforts to deescalate.

Ukraine over the weekend launched a large-scale drone attack against Russia.

The attack threatens to further undermine already tenuous relations between the two countries, which are set to hold peace talks on Monday.

OPEC+ hikes output as expected in July 

The OPEC+ over the weekend agreed to increase output in July by the same margin it did in the past two months, which was in line with market expectations.

The OPEC+ agreed to hike production by 411,000 barrels per day in July, as it had for the past two months. The move also ducked some expectations for a bigger hike.

Fears of increased OPEC+ production had pressured oil prices for the past two weeks, especially amid persistent concerns over slowing demand due to global trade disruptions.

The cartel is now seeking to increase production to help offset the impact of lower oil prices, while also punishing overproducers.  – Source: investing.com