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Oil rises as supply concerns persist By Reuters

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Oil rises as supply concerns persist By Reuters

© Reuters. FILE PHOTO: Workers see oil pumps in the background at the Uzen oil and gas field in Kazakhstan’s Mangistau region on November 13, 2021. REUTERS/Pavel Mikheyev

by Rowena Edwards

LONDON (Reuters) – Oil prices climbed for a third straight session on Friday, shrugging off worries about global economic growth as imminent European Union sanctions on Russian oil raised prospects for tighter supply.

Futures were up 85 cents, or 0.77%, at $111.75 a barrel by 1346 GMT, while U.S. West Texas Intermediate (WTI) crude gained 72 cents, or 0.67%, to $108.98 a barrel Dollar.

Both contracts rose more than $2 a barrel in early trade and were on track for a second week of gains, boosted by EU proposals to phase out Russian supplies within six months and refined products by the end of 2022. All shipping and insurance services that transport Russian oil are also banned.

Three EU sources told Reuters on Friday that the bloc was tweaking its sanctions program to win support from reluctant countries.

“The looming EU embargo on Russian oil is causing severe supply constraints,” said PVM analyst Stephen Brennock. “In any case, OPEC+ is not in the mood to help, even if higher energy prices spur harmful levels of inflation.”

The Organization of the Petroleum Exporting Countries, Russia and allied producers (OPEC+) defied calls from the West to boost output further, sticking to plans to raise their June output target by 432,000 bpd. nL2N2WX0IO]

However, analysts expect the group’s actual production growth to be much smaller due to capacity constraints.

Jeffrey Halley, senior market analyst for Asia Pacific at OANDA, said: “With production challenges affecting Nigeria and other African members, there is zero chance of some members filling this quota.”

A U.S. Senate panel has introduced a bill that could expose OPEC+ to lawsuits for colluding to boost oil prices.

Investors are also eyeing higher U.S. demand this fall as Washington unveils plans to buy 60 million barrels of crude for emergency storage.

Demand concerns over signs of weakness in the global economy capped price gains.

The Bank of England warned on Thursday that Britain raised interest rates to the highest level since 2009, raising interest rates by 0.25 percentage points to 1%, thus facing the double whammy of a recession and inflation exceeding 10%.

China’s strict restrictions on COVID-19 brought headwinds to the world’s second-largest economy in the second quarter.

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