Oil up over sustained supply worries due to EU proposal to cut Russian oil

By Ebru Sengul Cevrioglu

IZMIR, Turkiye (AA) - Oil prices increased on Friday amid sustained worries over supply tightness ahead of the EU decision on whether it will ban Russian oil by the year end, and on the reluctance of OPEC+ producers to add stock to the market.

International benchmark Brent crude cost $112.13 per barrel at 06.46 GMT for a 1.10% increase after closing the previous session at $110.90 a barrel.

American benchmark West Texas Intermediate (WTI) traded at $109.45 per barrel at the same time for a 1.09% increase after the previous session closed at $108.26 a barrel.

The long-awaited proposal by the EU on cutting Russian oil imports was echoed by European Commission President Ursula von der Leyen on Wednesday during her speech at the European Parliament's plenary session in France.

The decision is expected to be made by the latest on May 9. The adoption of the ban on Russian crude oil would enter into force six months later and prohibit the import of Russian refined oil products by the end of the year.

Meanwhile, despite continued calls for increased production, the world's biggest oil producers agreed Thursday to adhere to the current plan of increasing output by 432,000 barrels per day (bpd) through June.

At the 28th ministerial meeting via videoconference, the 23-member group of the Organization of Petroleum Exporting Countries (OPEC) and allies, known as OPEC+, said "continuing oil market fundamentals and the consensus on the outlook pointed to a balanced market.”

It further noted the continuing effects of geopolitical factors and issues related to the ongoing pandemic.

Therefore on the supply side, investors are monitoring the US emergency oil supply release to mitigate the effects of high energy prices.

Biden announced in March that the US and its allies would release 240 million barrels of oil from their strategic petroleum reserves, with 180 million barrels coming from the US in the next six months to close the gap between high demand and low supply to bring down crude prices.