Oil Prices Reach Three-Week High Amid Supply Concerns and Rising Chinese Imports

Signs of a tightening global supply and increased demand from China helped oil prices rise Monday to their highest level in three weeks.

In addition to the profits, investors are keeping an eye on geopolitical developments and possible US sanctions against Russia, which could further disrupt global energy supplies.

West Texas Intermediate (WTI) crude increased by $0.93, or 1.4%, to $69.38 per barrel, while Brent crude futures increased by $0.89, or 1.3%, to $71.25 per barrel. Both benchmarks continued their upward trend from the previous week, when WTI gained 2.2% and Brent rose 3%.

Analysts say several factors helped to support the rally. According to customs data released Monday, China’s crude oil imports in June rose 7.4% year over year to 12.14 million barrels per day, the highest level since August 2023.

With US President Donald Trump expected to make a significant announcement regarding Russia after pledging to send more defense systems to Ukraine, geopolitical risk is also once again in the spotlight. A bipartisan bill that would impose additional sanctions on Moscow is also gaining momentum in the US Congress. European Union officials are also preparing an 18th round of sanctions against Russia, potentially including a lower oil price cap.

“The market still perceives tightness, especially since inventory builds are mostly occurring in China and in transit, not in key storage hubs,” noted Giovanni Staunovo, an analyst at UBS.

Supply-side problems are made worse by the fact that Russia’s exports of seaborne oil products decreased 3.4% in June compared to May, according to industry data. Diesel and distillate stocks in the United States have fallen to their lowest point since 2005.

Some market participants anticipate that oil prices will continue to be supported despite more general worries about global trade and energy demand, particularly in view of Trump’s recent threats to impose 30% tariffs on goods from the European Union and Mexico. Despite volatility, SDIC Essence Futures analysts pointed out that geopolitical tensions and supply uncertainties could support a “higher floor” in prices in the third quarter.

The focus will shift to OPEC’s monthly market report, which could reveal information about output levels in the future and is anticipated on Tuesday. Investors will also be keeping an eye on China’s second-quarter industrial production and GDP statistics, as these could provide insight into the country’s enormous refining industry’s possible oil demand.

With input from Bloomberg and Reuters.