Oil prices rebounded nearly five per cent today across both major benchmarks amid growing tensions between OPEC and the European Union (EU) and China’s relaxation of some Covid-19 restrictions.
Brent Crude has risen 4.89 per cent and is back above $100 per barrel at $103.30 while WTI Crude has risen 4.65 per cent to $98.67.
OPEC has warned it would be impossible to replace potential supply losses from Russia.
It is forecasting the loss of seven million barrels from global markets if the trading bloc goes ahead with potential oil sanctions.
This would drive up fears of supply shortages and likely cause further market rallies.
The EU remains split on the prospect of oil sanctions, but has already announced plans to ban coal imports from Russia.
OPEC is also committing to only modest increases in its oil ramp-up following heavy pandemic losses, pledging to boost supplies only by 400,000 barrels per day next month.
It has persistently failed to reach its output targets over the past six months – with multiple members have failing to hit agreed quotas.
Meanwhile, Shanghai’s relaxation of some COVID-19 restrictions eased concerns about Chinese demand.
More than 7,000 residential units had been classified as lower-risk areas after reporting no new infections for 14 days and districts have since been announcing which compounds can be opened up.
However, prices are likely to remain weighed down by International Energy Agency (IEA) and US commitments to flood the market with 240m barrels.
OPEC has cut its forecast for growth in world oil demand this year – citing the impact of Russia’s invasion of Ukraine, rising inflation as crude prices soar and the resurgence of the Omicron coronavirus variant in China.
It said world demand would rise by 3.67 million barrels per day (bpd) in 2022, down 480,000 bpd from its previous forecast.