Oil prices increase over blurry supply outlook

Oil prices increased on Friday over supply uncertainties with a more aggressive energy war between the EU and Russia, while lockdowns in China, the world’s largest oil-consuming country, continue weighing on market sentiment, increasing demand concerns.

International benchmark Brent crude traded at $89.47 per barrel at 10.10 a.m. local time (0710 GMT) for a 0.36% gain from the closing price of $89.15 a barrel in the previous trading session.

American benchmark West Texas Intermediate (WTI) traded at $83.70 per barrel at the same time for a 0.19% increase after the previous session closed at $83.54 a barrel.

Oil prices increased on Friday, although registering losses on a weekly basis, as investors assess risks of the escalation in the energy war between the EU and Russia, with the EU's latest move in seeking options to impair the Russian economy.

Russian President Vladimir Putin said on Wednesday that Moscow is ready "to switch on" the Nord Stream II pipeline "tomorrow" to deliver gas to Europe if the EU gives the green light.

His remarks came after G7 member states agreed last week to cap Russia's crude oil export prices. In the aftermath, Russian energy giant Gazprom said its key Nord Stream pipeline that supplies gas to Europe would remain shut due to a technical issue and could not restart until it is fixed.

Meanwhile, lingering demand concerns continue exerting downward pressure on prices as China insists on strict pandemic measures.

Prices fell to lows seen before the Russian-Ukraine war, with Brent decreasing to $91.20 in previous trade over weak demand fears following lockdowns imposed in China on Saturday on an estimated 65 million people across some 33 cities, according to public information compiled by Caixin.

On Thursday, the country extended lockdown measures in the western city of Chengdu, a city home to almost 21 million people.

Demand concerns further increased after the Energy Information Administration (EIA) said on Thursday that US commercial crude oil inventories rose by around 8.8 million barrels to 427.2 million barrels, against the market expectation of a rise of 3.6 million barrels.

Strategic petroleum reserves, which are excluded in commercial crude stocks, fell by 7.5 million barrels to 442.5 million barrels last week, the data revealed.

Gasoline inventories increased by 300,000 barrels to 214.8 million barrels over the same period.

Contributing to economic concerns and petroleum demand, the European Central Bank (ECB) on Thursday hiked its three key rates by 75 basis points each in a historic move, as eurozone inflation faces a record-high and war-driven energy crisis, creating new risks for the entire region.

Australia's central bank on Tuesday also raised its policy interest rate – cash rate by 50 basis points to 2.35%.