Petroleum prices rose on Wednesday after plunging nearly 10% in the last two sessions, buoyed by supply concerns as the European Union works on gaining support for a Russian oil embargo and flows of Russian gas to Europe through a key transit point in Ukraine dried up.
The EU has proposed an embargo on Russian oil, which analysts say would further tighten the market and shift trade flows. A vote, which needs unanimous support, has been delayed as Hungary has dug in its heels in opposition.
Brent crude was up $2.93, or 2.9%, to $105.39 U.S. a barrel, while U.S. West Texas Intermediate crude climbed $2.96, or 3%, to $102.73.
Oil also gained on hopes of Chinese economic stimulus after China’s factory-gate inflation eased and investors took comfort in signs of lower domestic COVID-19 infections, and on the disruption to flows of Russian gas.
Oil has surged in 2022 as Russia’s Ukraine invasion added to supply concerns, with Brent reaching $139 U.S., the highest since 2008, in March. Worries about growth from China’s COVID curbs and U.S. interest rate hikes have prompted this week’s slump.
A backdrop of tight supply because of what major producers say is partly a result of inadequate investment remains supportive for oil. The United Arab Emirates energy minister highlighted these concerns on Tuesday.