Oil supported by supply threats yet still set for weekly drop on demand fears


Oil rose on Friday supported by real and threatened cuts to supply, although crude was set for a second weekly decline as aggressive interest rate hikes and China’s COVID-19 curbs weighed on the demand outlook.

Russian President Vladimir Putin has threatened to halt oil and gas exports to Europe if price caps are imposed and a small cut to OPEC+ oil output plans announced this week also supported prices.

Brent crude rose $1.24, or 1.4%, to $90.39 a barrel while U.S. West Texas Intermediate (WTI) crude climbed $1.05, or 1.3%, to $84.59.

Brent is down sharply from a surge in March close to its all-time high of $147 after Russia invaded Ukraine, pressured by worries about a recession and demand.

Despite Friday’s bounce, both crude benchmarks were headed for a weekly drop of more than 2%, with Brent this week hitting its lowest since January.

While supply tightness supports the market, the European Central Bank’s unprecedented rate hike of 75 basis points this week and more COVID-19 lockdowns in China have weighed.

The city of Chengdu extended a lockdown for most of its more than 21 million residents on Thursday while millions more in other parts of China were told to shun travel during upcoming holidays.

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