The EU's Ban on Russian Oil And The End of Shanghai's Lockdown Push up Oil Prices A Little

Oil prices inch higher on Wednesday after European Union leaders agreed to a partial and phased ban on Russian oil and China lifted its COVID-19 quarantine of Shanghai.

At 06:05 GMT, Brent crude for August delivery increased 35 cents, or 0.3%, to $115.95 a barrel. The contract closed Tuesday with a loss of 1.7%.

On Tuesday, the Brent contract for July delivery expired at $122.84 per barrel, an increase of 1 percent.

West Texas Intermediate (WTI) crude increased by 37 cents, or 0.3%, to $115.04 a barrel.

Both benchmarks closed May with gains, marking the sixth consecutive month of price increases.

EU leaders agreed in principle on Monday to reduce oil imports from Russia by 90 percent by the end of the year, the bloc's heaviest sanctions against Moscow since the invasion of Ukraine three months ago, which Moscow calls a "special military operation."

Once completely implemented, sanctions on crude will be implemented over a period of six months and on refined products over a period of eight. As a concession to Hungary and two other landlocked Central European countries, the embargo exempts Russian oil transported by pipeline.

After two months, Shanghai's severe COVID-19 lockdown was lifted on Wednesday, triggering predictions of a rise in fuel consumption in China.

Reports that some producers were considering terminating Russia's involvement in an OPEC+ output pact, a grouping of Organization of the Petroleum Exporting Countries members and allies, on the premise that such a move would boost supply, capped gains.

The prospective exemption of Russia from the output deal by OPEC is the greater issue, according to Jeffrey Halley, senior market analyst at OANDA.

The Wall Street Journal, quoting OPEC delegates, stated that while there was no explicit push for OPEC countries to pump extra oil to compensate for any prospective Russian deficit, several Gulf members had begun planning for an output rise in the coming months.

Stephen Innes, managing partner at SPI Asset Management, wrote in a note: "The assumption of extra supply entering the market, even after excluding Russia, could be fueling a portion of this sell-off as oil lost its post-EU embargo bounce."

U.S. crude oil output increased by more than 3 percent in March to its highest level since November, according to a report released Tuesday by the U.S. Energy Information Administration.

On Thursday, the U.S. government was due to release stockpile data. In a Reuters survey, analysts predicted that U.S. crude oil inventories would decline last week, but gasoline and distillate inventories would increase.