Oil slackens as quarantines in China put pressure on demand
Western sanctions are reducing the supply of Russian crude, and price-supported exports from Russia are supporting prices. Meanwhile, curfews in China are affecting the oil demand. Oil prices were mixed on Friday as the outlook for crude oil demand became significant as China's COVID-19 lockdowns and supply cuts became alarming.
Brent crude futures rose 15 cents to $107.74 a barrel at 0410 GMT after gaining 2.1% in the previous session. The front-month June contract expires on Friday. The more active July contract rose 26 cents to $107.52 a barrel.
West Texas Intermediate (WTI) crude was down 3 cents to $105.33 a barrel, after rising 3.3% on Thursday.
Supported by the possibility of Germany joining other European Union member states that have placed an embargo on Russian oil, both contracts are on track to post five-month gains and close the week higher.
Yet despite Beijing's impact on its economy and global supply chains, oil prices remain volatile as China shows no signs of easing lockdown measures.
With the escalation of lockdowns since March, China's economic indicators have turned even redder and its GDP is expected to slow further in Q2.
Prices are likely to be down in the short term in the volatile oil market, due to China's demand for oil, as the lockdowns are expected to become more widespread and prolonged in May and beyond.
On the supply side, OPEC+ will most likely stick to its current agreement and agree on a small production increase for June, when it meets on May 5.
However, Russia's oil production could drop by as much as 17% in 2022, as Western sanctions on Moscow over its invasion of Ukraine are putting a strain on investment and exports.
Additionally, stringent sanctions made it difficult for Russian ships to deliver oil to their customers, and Exxon Mobil Corp declared force majeure for its Sakhalin-1 operations.
Concerns over cuts in Russia's oil exports, particularly diesel, pushed Asian refiners' margins to record levels.
Related Articles
Oil prices are rising as supply concerns increase amid expectations of a prolonged conflict in the Middle East
Oil prices continued to rise following US and Iranian attacks on ships serving their respective purposes
Oil prices closed higher this week following renewed US-Iran hostilities
