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Oil is rising due to supply concerns caused by the EU’s ban on Russian oil.

Oil prices rose on Wednesday as a result of supply concerns, including a move by the European Union to restrict Russian oil and a warning from oil-producing countries that major supply difficulties may arise after demand rebounds from the coronavirus disease 2019 (Covid-19) collapse.

At 0706 GMT, international benchmark Brent crude was trading at USD104.78 a barrel, up 2.26 percent from the previous session’s close of USD102.46.

At the same time, the American benchmark West Texas Intermediate (WTI) was trading at USD101.94 per barrel, up 2.18 percent from the previous session’s close of USD99.76 per barrel.

The EU is now debating a Russian crude oil and petroleum product embargo, as well as restrictions on Russian oil and product shipping.

If approved, Hungary, Slovakia, and Czechia, which are all heavily reliant on Russian energy supplies, will have a longer transition period than the rest of the EU.

Bulgaria also opposed the measure, warning the EU that it would not support sanctions unless Russia’s oil sales were exempted from the proposed prohibition.

Following pressure from Greece, Cyprus, and Malta, more concessions on the sanctions package are expected, including the removal of limitations on EU tankers carrying Russian oil.

Meanwhile, Ukraine announced that it will halt gas flow via a transit point that supplies nearly a third of the fuel routed from Russia to Europe via Ukraine.

Saudi Arabia’s and the United Arab Emirates’ (UAE) energy ministers cautioned on Tuesday that “consistently low investment in conventional energy sources risks” leaving the globe short of spare production capacity for crude oil, processed products, and natural gas.

When the globe fully recovers from the Covid-19 demand collapse, UAE Energy Minister Suhail al-Mazrouei claimed OPEC+ may not be able to guarantee enough supply.

The prolonged Chinese blockade continues to increase demand-side risks for investors.

The lockdown in Shanghai, according to Fitch Ratings’ latest Economics Dashboard, will worsen global supply-chain tensions and inflation concerns.

Late Tuesday, the American Petroleum Institute (API) announced its estimate of a 1.6 million-barrel increase in US crude oil stockpiles, compared to the market’s forecast of a 457.000-barrel decline.

The increase in stocks is expected to signify a reduction in petroleum demand in the United States, the world’s largest oil consumer.

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