Oil prices extend gains after news of EU's Russian oil ban proposal

Oil prices edged higher at the start of Asian trade on Thursday, extending gains from the previous session, after the European Union proposed new sanctions against Russia that included an embargo on crude oil in six months.

Brent crude futures rose 22 cents to $110.36 a barrel by 0:02 GMT. WTI crude futures rose 15 cents to $107.96 a barrel.

Both benchmarks rose over $5 a barrel on Wednesday.

The proposal, which was announced by European Commission President Ursula von der Leyen and needs unanimous backing by the 27 EU countries to take effect, includes phasing out supplies of Russian crude oil in six months and refined products by the end of 2022. It also proposes to ban in a month's time all shipping, brokerage, insurance and financing services offered by EU companies for the transport of Russian oil.

However, the EU faces the task of finding alternatives when energy prices have surged as it imports some 3.5 million barrels of Russian oil and oil products every day and also depends on Moscow's gas supplies.

A handful of eastern EU countries are concerned that the halt would not allow them enough time to adapt.

Market participants awaited a meeting on Thursday of the Organization of the Petroleum Exporting Countries and allied producers, known as OPEC+.

The group is expected to agree to raise production targets by 432,000 barrels per day (bpd) for June, four OPEC+ delegates told Reuters, sticking to plans for a gradual ramp-up of monthly production.

In the United States, crude stocks rose modestly last week, according to the U.S. Energy Information Administration. Stocks were up 1.2 million barrels as the United States released more barrels from its strategic reserves. [EIA/S]

 

(Reporting by Stephanie Kelly; editing by Richard Pullin)