Oil Falls As Demand Concerns Intertwine With Tight Supply

Oil prices fell at the start of Asian trading on Friday, as fears about an economic slowdown dampening demand for petroleum competed with concerns about additional European Union sanctions against Russia, including a crude oil embargo.

By 0015 GMT, Brent futures had down 37 cents, or 0.3 percent, to $110.53 per barrel, while US West Texas Intermediate (WTI) oil had fallen 33 cents, or 0.3 percent, to $107.93 per barrel.

The Bank of England cautioned Thursday that the UK faces a double whammy of recession and inflation exceeding 10% if interest rates are not increased by a quarter of a percentage point to 1%.

Meanwhile, Wall Street stocks fell as investors fled risky investments, fearful that the Fed would raise rates further this year to rein in inflation.

On the supply side, the Organization of the Petroleum Exporting Countries, Russia, and allied producers, collectively known as OPEC+, agreed to another small monthly rise in oil production, as predicted.

Ignoring Western countries' pleas to increase output further, OPEC+ decided to increase June production by 432,000 barrels per day, in keeping with its strategy to undo limitations imposed during the epidemic.

The EU sanctions plan, which requires unanimous support from the bloc's 27 member states, calls for the phase-out of Russian refined goods by the end of 2022 and the prohibition of all shipping and insurance services used to carry Russian oil.

A Senate subcommittee in the United States passed legislation that may expose OPEC+ to litigation for colluding in rising oil prices. For more than two decades, Congress has failed to enact variations of the legislation, but politicians are concerned about growing inflation and high fuel costs.