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Brent crude futures rose $3.99, or 3.8%, to $108.96 a barrel by
1121 GMT. West Texas Intermediate crude futures rose $4.05, or
4%, to $106.46 a barrel.
European Commission President Ursula von der Leyen on Wednesday
proposed a phased oil embargo on Russia over its war in Ukraine,
as well as sanctioning Russia's top bank, in a bid to deepen
Moscow's isolation.
The Commission's measures include phasing out supplies of
Russian crude within six months and refined products by
end-2022, von der Leyen said. She also pledged to minimise the
impact on European economies.
Hungary and Slovakia, however, will be able to continue buying
Russian crude oil until the end of 2023 under existing
contracts, an EU source told Reuters on Wednesday.
"Russian oil is now 'bad oil'," SEB chief commodities analyst
Bjarne Schieldrop said.
"This energy war of 'good oil' versus 'bad oil' has just
started," he added.
Investors are also waiting for an announcement from the U.S.
Federal Reserve on Wednesday. It is expected to intensify
efforts to bring down high inflation by raising interest rates
and reducing its balance sheet.
In the United States, crude and fuel stocks fell last week,
according to market sources citing American Petroleum Institute
figures. Crude stocks fell by 3.5 million barrels for the week
ended April 29, they said. This was more than an expected
800,000-barrel drop estimated in a Reuters poll. [API/S]
U.S. government data on stocks is due on Wednesday. [EIA/S]
Oil prices fell more than 2% on Tuesday on demand worries
stemming from China's prolonged COVID-19 lockdowns that have
curtailed travel plans during the Labour Day holiday season.
The global manufacturing purchasing managers index contracted in
April for the first time since June 2020, with China's lockdowns
a key contributor, Caroline Bain, chief commodities economist at
Capital Economics said in a note.
The Organization of the Petroleum Exporting Countries and their
allies on Thursday are expected to stick to their policy for
another monthly production increase.
(Reporting by Ahmad Ghaddar; additional reporting by Florence
Tan in Singapore; editing by Tom Hogue and Jason Neely)
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