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NEW YORK: Oil prices rose on Thursday, reversing earlier losses, as supply concerns and geopolitical tension in Europe got the upper hand over the economic fears dogging financial markets as inflation soars.

Brent crude rose 46 cents, or 0.4%, to $107.97 a barrel by 11:44 a.m. EDT (1644 GMT). WTI crude rose $1.14, or 1.1 %, to $106.85.

“The trading has been thin and nobody knows what’s going to move the needle,” said John Kilduff, partner at Agan Capital LLC in Galena, illinois.

A pending European Union ban on oil from Russia, a key supplier of crude and fuels to the bloc, is anticipated to further tighten global supplies.

The EU is still haggling over details of the Russian embargo, which needs unanimous support. However, a vote has been delayed as Hungary opposes the ban because it would be too disruptive to its economy.

More broadly, oil prices and financial markets have been under pressure this week amid jitters over rising interest rates, the strongest US dollar in two decades, concerns over inflation and possible recession.

Prolonged COVID-19 lockdowns in the world’s top crude importer, China, have also impacted the market.

“The current and expected sanctions on Russian oil have received a major counter in the form of reduced demand and increased (Strategic Petroleum Reserve) supplies,” said Jim Ritterbusch, president of Ritterbusch and Associates in Galena, Illnois.

US headline CPI for the 12 months to April jumped 8.3%, fueling concerns about bigger interest rate hikes, and their impact on economic growth.

“Soaring pump prices and slowing economic growth are expected to significantly curb the demand recovery through the remainder of the year and into 2023,” the International Energy Agency (IEA) said on Thursday in its monthly report.

“Extended lockdowns across China ... are driving a significant slowdown in the world’s second largest oil consumer,” the agency added.

The Organization of the Petroleum Exporting Countries (OPEC)cut its forecast for growth in world oil demand in 2022 for a second straight month, citing the impact of Russia’s invasion of Ukraine, rising inflation and the resurgence of the Omicron coronavirus variant in China.

On Wednesday, oil prices jumped 5% after Russia sanctioned 31 companies based in countries that imposed sanctions on Moscow following the Ukraine invasion.

That created unease in the market at the same time that Russian natural gas flows to Europe via Ukraine fell by a quarter. It was the first time exports via Ukraine have been disrupted since the invasion.

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