Oil falls as demand concerns weigh against tight supply

Oil prices dipped at the start of Asian trade on Friday as worries about an economic downturn that could dampen demand for crude vied with concerns over new sanctions from the European Union against Russia, including an embargo on crude oil.

Brent futures fell 37 cents, or 0.3%, to $110.53 a barrel by 0015 GMT, while U.S. West Texas Intermediate (WTI) crude fell 33 cents, or 0.3%, to $107.93 a barrel.

The Bank of England warned Thursday that Britain risks a double-whammy of a recession and inflation above 10% as it raised interest rates to their highest since 2009, hiking by quarter of a percentage point to 1%.

Wall Street stocks tumbled, meanwhile, as investors shed risky investments, worried the Fed might hike rates more this year to tame inflation.

On supply, the Organization of the Petroleum Exporting Countries, Russia and allied producers, known as OPEC+, agreed as expected to another modest monthly increase in oil output.

Ignoring calls from Western nations to hike output more, OPEC+ agreed to raise June production by 432,000 barrels per day, in line with its plan to unwind curbs made when the pandemic hammered demand.

The EU sanctions proposal, which needs unanimous backing from the 27 countries in the bloc, involves phasing out imports of Russian refined products by the end of 2022 and a ban on all shipping and insurance services for transporting Russian oil.

A U.S. Senate panel advanced a bill that could expose OPEC+ to lawsuits for collusion on boosting oil prices. Congress has failed to pass versions of the legislation for more than two decades, but lawmakers are worried about rising inflation and high gasoline prices.

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