Oil prices increased on Monday due to a constrained supply failing to keep up with the still-strong demand, the appearance of barriers in the Iranian nuclear talks, and the threat of a Russian oil embargo.

By 1100 GMT, Brent crude futures were up 88 cents, or 1 per cent, to $93.72 per barrel. At $87.48, US West Texas Intermediate crude had gained 69 per cent or 0.8 per cent.

Prices barely changed last week as benefits from a notional supply cut by OPEC and its partners, including Russia, collectively known as OPEC+, were countered by lockdowns in China, the world’s largest importer of crude oil.

However, the US Treasury warned that the cap would cause oil and American gasoline prices to increase much more this winter.
Beijing’s zero-COVID policy, which encourages people to stay at home over the holidays and lowers gasoline consumption, may cause China’s oil demand to decline for the first time in 20 years this year.

According to Jun Rong Yeap, market strategist at IG, “the persistence of headwinds from China’s strengthened viral restrictions and further slowing in global economic activities could still attract some worries over a more persistent gain.”

The US and European Central Bank Meanwhile, the Federal Reserve is poised to raise interest rates further to combat inflation, which might boost the US dollar and increase the cost of dollar-denominated oil for investors.