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NEW DELHI: Crude oil prices extended gains on Wednesday following the European Union’s decision to ban import of Russian oil, albeit in a phased manner.

EU leaders agreed in principle on Monday to cut 90% of oil imports from Russia by the end of 2022, giving way to the region's toughest sanctions on Moscow following its invasion of Ukraine three months ago.

Import of Russian crude will be phased in over six months and on refined products over eight months. The embargo exempts pipeline oil from Russia as a concession to Hungary and two other landlocked central European countries.

The lifting of lockdown restrictions in China's financial hub Shanghai boosted demand prospects and supported prices, analysts said. 

Crude, however, is trading lower than the highs hit on Tuesday.

At 1105am today, Brent July futures on the Intercontinental Exchange was at $116.09 per barrel, up 0.42% from previous close. The West Texas Intermediate futures on the NYMEX rose 0.49% to $115.23 a barrel.

Rahul Kalantri, vice president for commodities at Mehta Equities, said, “Crude oil’s rally fizzled out following a report that OPEC members are exploring the idea of exempting Russia from its oil-production deal, which could open the door for other producers to pump more oil. Earlier, prices rallied within a hair of $120, the highest since early March, as the latest round of EU sanctions would forbid buying oil from Russia delivered by sea but includes a temporary exemption for pipelines."

He noted that exempting Russia from oil-production targets could potentially pave the way for Saudi Arabia, the UAE and other producers in the cartel to pump more crude.

“Market is also eyeing forthcoming OPEC+ meetings and their stance on the crude oil output. If the OPEC+ maintains status-quo on output, it could further support prices," Kalantri said, adding that crude oil prices are expected to remain volatile ahead of the release of US crude inventory data.

Back home, retail prices of petrol and diesel were unchanged in India for the 10th straight day. In Delhi, petrol is priced at 96.72 per litre, while diesel is selling for 89.62 a litre.

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