Around 5:15 p.m., WTI jumped 3.66% to $110.01 and Brent climbed 3.22% to $110.91.
Oil prices accelerated their rise on Friday, the two black gold benchmarks having exceeded 110 dollars a barrel, galvanized by fears of possible supply restrictions, in particular with the proposed European embargo on Russian oil.
Around 3:15 p.m. GMT (5:15 p.m. CET), a barrel of Brent from the North Sea for delivery in July took 3.22% to 110.91 dollars.
A barrel of US West Texas Intermediate (WTI) for delivery in June rose 3.66% to 110.01 dollars.
“Prices are rebounding today as the world waits for a broad economic slowdown and the potential implications of a recession on oil demand,” said Louise Dickson, analyst for Rystad Energy.
Two opposing forces are in place in the oil market.
“Supply concerns are supporting the price per barrel. The war in Ukraine and the prospect of the European Union imposing a total ban on Russian oil imports are likely to cause lower availability in an already tight market,” said Ricardo Evangelista, analyst for ActivTrades.
The draft EU embargo on Russian oil, which needs the unanimity of the 27 member states to be adopted, is still blocked by Hungary, dependent on Russian oil and gas.
Such a measure would cause gas prices to rise by 55% in Hungary, assured the head of Hungarian diplomacy in an interview published Thursday by the Spanish daily El País to justify Budapest’s opposition.
“An EU embargo, if fully enacted, could put around 3 million barrels a day of Russian oil off the grid, completely disrupting and ultimately altering global trade flows, causing panic on the market and extreme price volatility,” predicts Louise Dickson.
Price increases are however “limited by fears about the impact on demand of inflation and the slowdown in economic activity in China, due to the confinements linked to Covid-19” still in place, continues Ricardo Evangelista .
The Chinese Ministry of Health announced 50 new positive cases in Beijing on Friday. However, a decline seems to have begun in Shanghai (east), the main Chinese city currently affected by the epidemic and where all of the 25 million inhabitants have been confined since the beginning of April.
Inflation, which reached a record level of 7.5% over one year in April in the euro zone, and the highest for 40 years in the United States, also threatens demand.
“If the prospect of a recession becomes more evident, (…) it could erode support for oil prices due to weakening global demand,” said Han Tan, an analyst at Exinity.