Oil prices continued to rise on Friday amid concerns about tightened supplies ahead of the European Commission’s (EC) proposal to ban Russian oil by the end of the year.
Brent futures rose 84 cents, or 0.8 percent, to $111.74 a barrel by 0306 GMT, while U.S. West Texas Intermediate (WTI) crude climbed 80 cents, or 0.7 percent, to $109.06 a barrel.
Both Brent and WTI are on track to rise for a second week in a row amid the Commission’s proposal to phase out imports of Russian crude oil within six months and refined products by the end of 2022.
President of the European Commission Ursula von der Leyen confirmed the EC proposal of “a complete import ban on all Russian oil, seaborne and pipeline, crude and refined,” during the European Parliament’s plenary session in France on Wednesday.
“We will make sure that we phase out Russian oil in an orderly fashion, in a way that allows us and our partners to secure alternative supply routes and minimizes the impact on global markets,” von der Leyen noted.
“Thus, we maximize pressure on Russia, while at the same time minimizing collateral damage to us and our partners around the globe. Because to help Ukraine, our own economy has to remain strong.”
The move would also ban all shipping and insurance services from transporting Russian oil, Reuters reports. It still requires unanimous agreement from the 27 members of the bloc before it can go into effect.
Russia is one of the world’s largest producers of oil and natural gas, accounting for 17 percent of the world’s natural gas and 12 percent of its oil. It is also the biggest supplier of oil to Europe, which imports some 3.5 million barrels of Russian oil and oil products daily.
The Federal Reserve raised interest rates by the most since 2000 on May 4 as part of efforts to fight inflation levels that are currently at a 40-year-high in the nation. That sent Wall Street stocks tumbling amid investor fear that aggressive central bank policies around the world could hamper growth.
“There are concerns over global growth and what it could mean for oil demand,” Warren Patterson who heads ING’s commodities research, told Reuters. “However, the looming EU ban on Russian oil more than offsets this for now, and so should limit the downside for prices.”
Meanwhile, the Organization of the Petroleum Exporting Countries, Russia, and allied producers, known as OPEC+, on Thursday agreed to a modest monthly increase in oil flows.
They agreed to a collective oil production increase of 432,000 barrels a day in June, according to a press release despite the Biden administration’s repeated calls to substantially boost production and bring prices down.
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