International oil prices hit a new high in nearly three months, and sanctions against Russia may send refined oil prices skyrocketing

On Monday (May 30), international oil prices hit a new high since early March, and the European Union is about to discuss the sixth set of sanctions against Russia. High refining margins on diesel and gasoline in Europe and the U.S. have pushed prices for some types of physical crude to record highs, and any further ban on Russian oil would tighten an already undersupplied crude market.

At 16:42 GMT+8, NYMEX crude oil futures rose 0.73% to $115.91 a barrel; ICE Brent crude futures rose 0.69% to $120.25 a barrel. Both cities hit new highs since early March, reaching $116.39 a barrel and $120.50 a barrel, respectively.


Governments failed to agree on an embargo on Russian oil imports on Sunday (May 29), but will still try to exempt pipeline crude oil to landlocked Central and Eastern European countries before the summit begins on Monday afternoon, EU officials said. make a progress.

Negotiations on the EU's energy embargo against Russia have been going on for a month, but no progress has been made. In a bid to break the deadlock, the European Commission proposed the ban would only apply to Russian oil shipped into the EU by tanker, leaving Hungary, Slovakia and the Czech Republic to continue receiving Russian oil via pipeline for a period of time until alternative supply arrangements are achieved.

Authorities in Budapest supported the proposal, officials said, but talks on Sunday failed to resolve EU financing concerns Hungary wants to boost Croatia's oil pipeline capacity and switch its refineries from Russian Urals to Brent. .

EU envoys will discuss the issue on Monday morning, and how to ensure a level playing field, as member states that rely on the shipment of Brent crude will incur higher energy costs due to sanctions. Any further embargo on Russian oil would tighten the already undersupplied crude market.

Demand for gasoline, diesel and jet fuel is rising ahead of the peak summer demand season in the U.S. and Europe. The average U.S. diesel price hovered around a record $5.58 this month, up three-quarters from last year, as the retail cost of gasoline also hit a record $4.37 a gallon.

High refining margins on diesel and gasoline in Europe and the U.S. have pushed prices for some types of physical crude to record highs, according to traders, underscoring the market's oversupply and the difficulty of reducing the cost of transportation fuels. Not only has that pushed inflation to a 40-year high, it has sparked fears of a recession in the U.S. and parts of Europe.

The Organization of the Petroleum Exporting Countries and its partners (OPEC+) will reject calls from the West to speed up oil production increases when they meet on Thursday (June 2) by maintaining the current modest output increase plan of 432,000 barrels per day (bpd) in July. Oil-producing countries believe that the international oil market is balanced and that the recent rise in prices has nothing to do with fundamentals.

Oil markets were further strained after Iran said on Friday that its navy had seized two Greek oil tankers in retaliation for the U.S. seizure of Iranian oil from a tanker parked off the coast of Greece.