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Building on last week’s rises, oil prices have continued to increase as April draws to a close.
The inflation in oil prices has gathered momentum on the back of the German government’s apparent decision to remove any opposition to the ban on Russian oil imports, aiming to find alternative suppliers. This decision further supports the negative global response to the Russian government as the Russia and Ukraine conflict continues, further adding to the likelihood of tightened global oil supplies.
The market also reacted to Russia’s decision to cut off gas supplies to both Poland and Bulgaria. This is an attempt on their part to push the EU to adopt its new gas payments scheme that requires gas buyers to open an account with Gazprombank, where payments in euros or dollars would be converted into roubles. This would greatly benefit the Russian economy.
In China, the Covid-19 outbreak continues to show little sign of abating as Beijing becomes the latest city in which Covid rates have increased among its population. The risk of a city-wide lockdown like that seen in Shanghai could prove crippling for Beijing. Whilst lockdowns of this manner are usually negative for oil prices, any declines were offset by comments from the Chinese central bank, which said on Tuesday that it will step up its monetary policy to support the Chinese economy.
