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By Adedapo Adesanya
The crude oil market closed in bearish territory on Friday after the European Union said it would allow Russian state-owned companies to ship oil to third countries as part of an adjustment to sanctions agreed by member states this week.
Thanks to this development, Russian state-owned companies, Rosneft and Gazprom, will be able to ship oil to third countries with the aim of limiting risks to global energy security.
Under changes to sanctions against Russia that took effect on Friday, payments related to purchases of Russian crude oil transported by European companies would not be prohibited.
“In order to avoid any potential negative consequences for food and energy security worldwide, the EU has decided to extend the exemption to the prohibition on entering into transactions with certain public entities with regard to transactions in products agriculture and the transport of oil to third countries,” the EU said in a statement.
This could mean that supply fears have eased slightly after Libya resumed production at several oilfields earlier this week and the price of Brent crude fell 0.64% to trade at 103, $20 a barrel, while West Texas Intermediate (WTI) crude fell 1.71 percent. cent to $94.70 a barrel.
Earlier in the week, the first tankers arrived in Libya to load oil for export, ending a force majeure event at key oil fields and ports in place since April.
Libya now expects to double its crude production to 1.2 million barrels a day within 10 days, but this is threatened by the possible escalation of friction between factions seeking to hold political power.
Signs of strong demand in Asia supported the benchmark Brent crude, putting it on track for its first weekly gain in six weeks.
Demand in India remained strong, with refining holding above pre-pandemic levels, while China is expected to make a big push to recover in the third quarter of this year.
It comes as the global economy looks increasingly likely to head for a serious downturn, just as central banks are aggressively reversing the ultra-loose monetary policy adopted during the pandemic to support growth.
Investors will also be watching the US Federal Reserve’s interest rate decision next week. Fed officials said the central bank would likely raise rates by 75 basis points at its July 26-27 meeting.