Oil remains stagnant as supply risks face economic headwinds

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LONDON – Oil prices remained stable on Friday, setting their course for a slight change in the week, as part of a planned EU embargo on concerns over Russia’s balanced demand for oil to slow economic growth.

Brent futures for July fell 18 cents, or 0.2%, to 2 112.22 a barrel by 1235 GMT, while the US West Texas Intermediate (WTI) fell 2 cents to $ 112.19 for June.

The WTI contract, which traded more actively in July, was down 14 cents at 9 109.75 a barrel.

The International Monetary Fund (IMF) has called on Asian economies to be aware of the risks of spillover from monetary tightening, with the IMF’s deputy managing director Kenji Okamura saying they were “increasingly supportive of growth and withdrawing to stabilize debt and inflation”.

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Although the Bank of Japan’s policy has been in stark contrast to the global financial crisis, the central banks of the United States, Britain and Australia have recently raised interest rates.

Despite high fuel prices, however, Americans are getting behind the wheel, according to a report from the Federal Highway Administration on car miles.

Craig Erlam, a senior market analyst at OANDA, said:

“The risks are reversed due to China’s reopening and continued efforts toward the Russian oil embargo by the European Union.”

The EU hopes to reach an agreement on Russia’s proposed ban on crude imports, which would include engraving-outs for EU states that are most dependent on Russian oil, such as Hungary.

“Following Germany’s success in halving Russian oil imports in a very short period of time, an EU embargo is likely to be announced soon,” the consultancy BCA said in a note.

“Further declines in German Russian oil imports will soon make it easier for the EU’s largest economy to move away from importing Russian crude oil and commodities.” (Additional report by Scott Disavino; Edited by Frank Jack Daniel, Jason Neely, and Alexander Smith)

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