Oil rises in price amid shortage fears due to OPEC+ decision

Oil prices rose on May 6 on continued fears that the market will face a shortage of supply, Report informs.

July Brent futures rose by $2.44 (2.2%) on the London ICE Futures Exchange to $113.34 per barrel. By that time, June WTI futures had risen in price in online trading on the New York Mercantile Exchange (NYMEX) by $2.32 (2.14%), to $110.58 per barrel.

Since the beginning of the week, oil prices have risen by more than 5% and could complete a strong increase for the third week in a row, according to FactSet data.

The OPEC+ countries on May 5 voted to maintain the plan to increase the production quota in June by 432,000 barrels per day. However, despite the systematic increase in quotas since August 2021, OPEC+ cannot reach the allowed level of production. According to the results of March, producers are behind by 1.45 million barrels per day.

European states, meanwhile, are preparing to limit oil imports from Russia. Earlier this week, the European Commission proposed an embargo on Russian oil supplies to EU countries as part of the forthcoming sixth package of sanctions.

The US authorities announced their intention to start buying oil on the market to replenish the strategic reserve. As expected, the Department of Energy will begin accepting applications from sellers this fall, although actual deliveries will begin later.

Global oil prices rose on May 6 morning, investors are assessing the possibility of an oil shortage in the light of the OPEC+ decision and the statement of the head of the European Commission, Report informs referring to RIA Novosti.

The price of July futures for Brent crude rose by 0.58% to $111.54 per barrel, June futures for WTI grew in price by 0.55% to $108.56.

The positive dynamics of prices is due to the decision of OPEC+ to increase oil production in June by planned 432,000 barrels per day, which raised concerns about a possible shortage of raw materials.

In addition, the rise in prices is supported by the recent proposal of European Commission President Ursula von der Leyen for a phased introduction of a complete oil embargo on Russian oil as part of the sixth package of sanctions.