Oil prices up with fresh EU sanctions on Russia

By Zeynep Beyza Kilic

Oil prices increased on Thursday with new EU sanctions on Russia which threaten oil supply and increased demand in the US, the world's biggest crude consumer.

The international oil benchmark of Brent crude rose by 0.14 to $73.45 per barrel at 10.48 a.m. local time (0748 GMT), up from the previous session's close of $73.34.

The US benchmark West Texas Intermediate also increased by 0.13% to $70.01 per barrel, compared to $69.92 at the close of the prior session.

EU countries agreed on the 15th sanctions package on Wednesday in response to ongoing Russian assault against Ukraine.

While more individuals and organizations are added to the existing sanctions list, the new sanctions will also restrict the activities of ships belonging to third countries operating in support of Russia.

The EU imposes a wide range of restrictions on Russia, including trade, finance, energy, industry, technology, transport, including oil and coal, dual-use and luxury goods, as well as gold and diamonds.

The sanctions also include the ban on shipping crude oil and some oil products transported by sea from Russia to the EU, the exclusion of some Russian banks from the international payment system SWIFT and the suspension of the activities of many broadcasting organizations.

Latest data from the Energy Information Administration (EIA) revealed an increase in demand in the US, lending support to oil prices.

US commercial crude oil inventories decreased by 1.4 million barrels to 422 million barrels, during the week ending Dec. 6, EIA said on Wednesday.

The decline in inventory surpassed the market prediction of a 1 million barrels draw.

Also, with recent economic indicators, the probability of a 25-basis-point rate cut at the US Federal Reserve's (Fed) December 18 meeting increased to 98%.

Low interest rates are expected to increase the demand for oil by causing the US dollar to lose value against other currencies.

The weakening of the US dollar against other currencies aided the rise in oil prices. The US dollar index, which measures the US dollar's value against other currencies, fell 0.26% to 106.120.

The weak dollar is expected to enhance demand by making oil cheaper for those who use foreign currencies.