Geoffrey Smith 

Investing.com — Crude oil prices rose on Tuesday, supported by signs that Western governments are taking increasingly drastic measures to sustain consumption in a market artificially tightened by sanctions on Russia.

Futures had risen 0.1% to $110.06 per barrel by 9:25 ET (1330 GMT) and 0.5% to $116.14 per barrel at 116.14. While that’s still some $16 below their peak two weeks ago, prices have been in a steady upward trend for a week as hopes for a quick peace settlement in Ukraine – and for an easing of conditions for getting supplies out of Russia – have faded.

Maryland and Georgia in the United States have already enacted a suspension for one month of their gasoline taxes. New York, Illinois and Massachusetts are considering similar legislation. The U.S. was up 0.2% to $3.3796 per gallon.

Over the Atlantic, European governments have also begun to reduce fuel duties temporarily. They are usually much more expensive than U.S. prices. Italy and France already have announced similar measures. The U.K. should follow suit when Treasury Chief Rishi Sonak releases his spring spending statements.

An EU move to increase sanctions on Russia is prompting analysts to revise their price forecasts. Although the bloc previously exempted Russian oil and natural gas purchases from its sanctions it was unable to locate alternative suppliers.

However, Ukrainian President Volodymyr Zelensky has told European and U.S. lawmakers in a string of impassioned virtual addresses that this allows Russia to keep financing its war in Ukraine – a message that now appears to be getting through. According to The Wall Street Journal, diplomats have indicated that the EU will discuss banishment of Russian oil purchases at its summit this Thursday. However, banning the purchase of gas is still too much for Germany and other countries.

Francisco Blanch of Bank of America’s Global Commodities and Derivatives Research told Bloomberg TV Monday that the peak price of a summer barrel is $150. With an average annual price of $110, Blanch said that this was a new high.

“What the Ukraine crisis has done has been to life the entire expectation by at least $25-$30 a barrel,” said Blanch, who had previously expected prices to top out at $120/bbl.

Torbjorn Tornqvist, chief executive of the Russian-linked trading house Gunvor, told an FT event that Russian refiners are already cutting back shipments of diesel due to ‘self-sanctioning’ by western buyers, tightening the global market. This would also have a knock-on effect on crude oil markets, he said.

“What does that mean? It means more crude oil will need to be exported instead of the products, and we believe that is not possible and will lead to cutbacks in Russian production,” the FT quoted Tornqvist as saying.