Oil Up, but Economic Downturn, EU Sanctions Concerns Remain

© Reuters.

By Gina Lee

AiVIF.com – Oil was up on Friday morning in Asia, recovering from an earlier drop. However, worries about an economic downturn that could impact fuel demand persisted, alongside concerns over the latest European Union (EU) sanctions against Russia.

Brent oil futures rose 0.54% to $111.50 by 11:34 PM ET (3:34 AM GMT) and WTI futures rose 0.57% to $108.88.

U.S. stocks tumbled, a trend that was mostly followed in Asia, as investors avoided risk over worries that the U.S. Federal Reserve could hike interest rates further in 2022. The central bank hiked its interest rate to 1% on Wednesday as it handed down its latest policy decision.

The Bank of England also warned on Thursday that the U.K. risks a double-whammy of a recession and inflation above 10%. The central bank hiked its interest rate to 1%, the highest since 2009, as it handed down its own policy decision.

On the supply side, the Organization of the Petroleum Exporting Countries and allies (OPEC+) agreed to another modest monthly increase in oil output at its monthly meeting on Thursday. The cartel agreed to raise June production by 432,000 barrels per day, and continued to ignore calls from Western nations to step up this input level.

Meanwhile, the U.S. Senate’s Judiciary Committee advanced a bill that could expose OPEC+ to lawsuits for colluding to boost oil prices.

The EU sanctions proposal, the latest response to the Russian invasion of Ukraine on Feb. 24, requires unanimous backing from the 27 countries in the bloc. The proposal involves phasing out imports of Russian refined products by the end of 2022, as well as a ban on all shipping and insurance services for transporting Russian oil.