Crude oil prices rose in the early hours of Wednesday during the Asian trading session on reports that the European Union is working on new sanctions against Russia for invading Ukraine.
The new sanctions will target Russia’s oil industry, according to Ursula von der Leyen, the President of the European Commission.
According to Josep Borrell, the head of the foreign policy unit at the EU’s executive European Commission, the European Union is working on its sixth sanctions to de-SWIFT more banks and list names of disinformation actors and tighten some loose ends regarding oil imports in the region.
“We are working on the sixth package of sanctions which aims to de-SWIFT more banks, list disinformation actors and tackle oil imports.”
Brent crude oil rebounded to $103.52 per barrel at 6:09 am Nigerian time on Wednesday, up from $103.03 a barrel it traded on Tuesday. The U.S West Texas Intermediate oil stood at $102.77 per barrel.
Crude oil dipped on Tuesday on concerns China’s COVID-19 lockdown could hurt demand for the commodity given China’s position as the world’s largest importer of crude oil. However, the European Union announcement and 3.5 million barrels declined in U.S. crude oil inventories in the week ended April 29 bolstered oil prices on Wednesday.
Still, the drop in the global manufacturing purchasing manager index for the first time since June 2022 in the month of April remained a concern.
Caroline Bain, the chief commodities economist at Capital Economics, explained that given rising inflation and interest rates, “the big picture is clearly negative for commodities demand.”
“While supply constraints may keep commodity prices elevated for some time yet, we think subdued demand will weigh on most prices later this year and in 2023,” Bain said.