OIL HIGHER ON EU SANCTIONS

OIL PRICES rose nearly 1.5 percent on Friday, posting a second consecutive weekly increase as impending EU sanctions on Russian oil raised the prospect of tighter supply and had traders shrugging off worries about global economic growth.

Brent futures rose $1.49 to settle at $112.39 (about R1 794) a barrel. US West Texas Intermediate (WTI) crude climbed $1.51 to end at $109.77 a barrel.

“In the near term, the fundamentals for oil are bullish and it is only fears of an economic slowdown in the future that is holding us back,” said Phil Flynn, an analyst at Price Futures Group.

For the week, WTI advanced about 5 percent, while Brent nearly 4 percent after the EU set out an embargo on Russian oil as part of its toughest-yet package of sanctions over the conflict in Ukraine.

The EU is tweaking its sanctions plan, hoping to win over reluctant states and secure the needed unanimous backing from the 27 member countries, three EU sources told Reuters. The initial proposal called for an end to EU imports of Russian crude and oil products by the end of this year.

“The looming EU embargo on Russian oil has the makings of an acute supply squeeze. In any case, Opec+ is in no mood to help out, even as rallying energy prices spur harmful levels of inflation,” PVM analyst Stephen Brennock said.

Ignoring calls from Western nations to hike output more, the Opec+ stuck with its plan to raise its June output target by 432 000 barrels a day.

However, analysts expect the group’s actual production rise to be smaller due to capacity constraints.

“There is zero chance of certain members filling that quota as production challenges impact Nigeria and other African members,” said Jeffrey Halley, senior market analyst Asia Pacific at Oanda. I Reuters