By Gina Lee
Investing.com – Oil was up on Thursday morning in Asia, extending gains from the previous session after the European Union (EU) unveiled new sanctions against Russia.
Brent oil futures was up 0.35% to $110.53 by 12:09 AM ET (4:09 AM GMT) and WTI futures edged up 0.20% to $108.03.
The EU proposal, announced by European Commission President Ursula von der Leyen, includes phasing out supplies of Russian crude in six months and refined products by the end of 2022. The proposal could also see EU companies banned from offering shipping, brokerage, insurance, and financing services to transport Russian oil in a month’s time.
"That’s a likely game-changer for oil and refined product markets," Commonwealth Bank Of Australia analyst Vivek Dhar said in a note. Sanctions on insurance, previously used by the U.S. and European countries, were effective in limiting Iran's oil exports, the note added.
However, finding alternative supplies to the 3.5 million barrels of Russian oil and oil products that the EU imports daily could be challenging. Some eastern EU countries are also concerned that the proposal gives them insufficient time to adapt.
"The most immediate questions are how many countries will receive exemptions, the scope of the additional sanctions measures to curtail Russian oil exports to other key markets, and President Putin's response to the European action," RBC Capital Market head of global commodity strategy Helima Croft said in a note.
"We think the price response to such measures will depend on how far they go in making Russia’s 4.8 million barrels per day (bpd) of global exports unavailable as opposed to unpopular."
The Organization of the Petroleum Exporting Countries (OPEC) and allies (OPEC+) will meet later in the day, where it is expected to agree to raise production targets by 432,000 bpd for June 2022, four OPEC+ delegates told Reuters.
Meanwhile, Wednesday’s U.S. crude oil supply data from the U.S. Energy Information Administration showed a build of 1.302 million barrels in the week to Apr. 29. Forecasts prepared by Investing.com predicted a draw of 829,000 barrels, while a 692,000-barrel build was reported during the previous week.
Crude oil supply data from the American Petroleum Institute, released the day before, showed a draw of 3.479 million barrels.