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NEW DELHI : Crude oil prices rose about 5% on Wednesday owing to supply concerns on the back of the European Union’s proposal to ban energy imports from Russia.

Despite opposition from Hungary to the proposed ban, the EU is making efforts to come to an agreement this week to impose an embargo on Russian oil imports.

At the time of writing the story, the July contract of Brent futures on the Intercontinental Exchange was trading at $107.24 per barrel, higher by 4.67% from its previous close. The June contract of West Texas Intermediate rose 5.51% to $105.26 per barrel.

The surge in prices comes after a fall of around 9% in the last two trading sessions in line with a slump in other commodities and the equities market.

“The EU’s proposed phased embargo on Russian oil aided the rise in crude prices. However, the proposal needs a unanimous vote by EU members this week to pass," said Sandeep Sawant Dessai, research associate for base metals, Angel One Ltd.

Dessai noted that the drop in prices in the past two sessions came as the EU postponed its action on a proposed Russian oil embargo after Hungary objected to the decision and a few other countries expressed concerns about the impact on their economies. Further, rising covid-19 cases and prolonged lockdowns in China also raised concerns of fall in demand from the major oil importing country.

A Kotak Securities report said that prices rose on Wednesday as market focus shifted to the weekly inventory report. “The US EIA weekly report is expected to note a modest 0.457 million barrels decline in US crude oil and a modest drop in gasoline and distillate stocks," it said. A recovery in the stock markets also supported the oil prices, the report said.

The rise in crude prices impacts Indian as it imports around 85% of its energy requirements. The Indian basket of crude comprising Oman, Dubai and Brent crude, was last recorded at $103.29 per barrel on 10 May.

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