By Peter Nurse
Investing.com -- Oil prices climbed Thursday as investors focused on the tight global supply as the Ukraine war continues and with Libyan protests disrupting output from the OPEC member.
By 9:40 AM ET (1340 GMT), U.S. crude futures traded 1.6% higher at $103.79 a barrel, while the Brent contract rose 1.4% to $108.29 a barrel.
U.S. Gasoline RBOB Futures were up 0.9% at $3.3131 a gallon.
Russian troops have continued their assault on the Donbas region of eastern Ukraine, prompting finance ministers and central bankers from the Group of Seven nations to state that they want to isolate Moscow from the global economy for its unprovoked “war of aggression.”
The European Union is still weighing a ban on Russian oil, but although nothing formal has been agreed a number of consumers appear to be taking matters into their own hands by going elsewhere for their crude, adding to the overall tightness of the global market.
Bloomberg reported that Russian oil output averaged 10.11 million barrels of oil a day from the start of this month to April 19, which is down from 11.01 million barrels a day in March.
“Given the large amount of self-sanctioning we are seeing with Russian oil, it is likely that output will only decline further as term contracts expire,” said analysts at ING, in a note.
The European Union, in partnership with the International Energy Agency, has outlined a number of steps for its citizens to take to try and reduce the continent’s dependence on Russian energy, including turning down heating, lowering car speeds, and remote working.
The announcement of these steps suggests that an immediate EU ban on the use of Russian oil is unlikely in the immediate future.
“More likely will be a gradual phasing out of Russian oil, much like we are seeing with coal. A gradual phasing out would give time for trade flows to adjust in a more orderly fashion and so the impact on price would be more limited compared to an immediate ban,” added ING.
Elsewhere, Libya, a member of the Organization of Petroleum Exporting Countries, stated on Wednesday that it was losing more than 550,000 barrels per day of oil output due to blockades at major fields and export terminals.
Turning to the demand side, investors continue to monitor the COVID outbreak and associated lockdowns in China, the world’s largest import of crude, as the country struggles to contain a surge in cases including the first fatalities since the original outbreak.
Crude oil supply data from the U.S. Energy Information Administration, released Wednesday, showed a draw of 8 million barrels last week, suggesting demand remains strong in the world’s largest consumer.