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Oil price pushes higher as EU meets to discuss Russian sanctions

The push is on to find a better source of fuel to drive the EU economy as sanctions against Russia build. This, plus a return to full capacity in China after the recent lockdowns, is pushing Brent to two-month highs.

(Video Transcript)

Oil hits 2-month high

Oil prices have hit their highest level in two months as the markets respond to news that the European Union (EU) is meeting once again to discuss further sanctions against Russia and to find better and less expensive ways to source oil outside of the pipeline that ties Europe to Russia for both oil and gas.

This is an important part of what Europe is trying to do. What this means is that it does push up the price of fuel. Also, China coming back online after those COVID lockdowns means that more and more factories are going to be demanding more and more hydrocarbons to drive their machinery.

And, as a consequence, here in the UK we've seen petrol prices rise to record highs over the weekend. Many people are reporting 175p per liter.

Now, at the same time Prime Minister, Boris Johnson, has said he's declaring war against those petrol stations that are not passing on that 5p fuel duty relief that was given by the Chancellor recently. And he says he wants to name and shame them to try and get people to avoid using those.

Brent crude oil chart

Let's take a look at what's behind all this. And the price of this is Brent. Brent is the benchmark for the Organisation of the Petroleum Exporting Countries (OPEC) nations. And you can see here we're punching higher to levels there not seen since the 25th of March.

Let's look at this in the context of where we've come from, from those COVID lows all the way down at just shy of $19 a barrel. Here we are now at 116.15. Now up here back on the 8th of March, fuel at that point is only 155p a litre. So one has to wonder why it's 175p at these levels here at the pump when you've got a relatively lower level of price of a barrel of oil at this particular juncture.

So you can see why Boris Johnson is trying to force through this idea that he wants to push some of the rhetoric around some of these companies that just are not giving on the relief that the government wants to install at the pump. That being said, prices are rising and obviously some companies can't get fuel at these levels.

In terms of some of the candle action here, yes, there's been this push higher. But the only thing I would caution is that we've got the majority of the wick on this candle at the top. It's clear there are sellers in the market at these levels. But that being said, if you're long on Brent you put your stock below recent price action with a view to it up and possibly pass this high that we had here back on the 24th of March at $120 a barrel.

At the moment at least it's trading at 116.15, levels that we've not seen in two months.

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