Oil prices fell on Tuesday, with Hungary blocking the EU ban on Russian oil imports as investors profit from market volatility.
International benchmark Brent crude was trading at $109.27 per barrel at 0702 GMT for a 1.36% decrease after closing the previous session at $110.78 a barrel.
American benchmark West Texas Intermediate (WTI) was at $108.89 per barrel at the same time for a 1.27% loss after the previous session closed at $110.29 a barrel.
An EU ban on Russian oil exports seems unlikely in the near future, with Hungary continuing its opposition to the measure, contributing to downward oil price pressure.
The bloc’s leaders plan to meet next week, but many experts predict that the talks will not yield positive results.
Meanwhile, the head of the International Monetary Fund (IMF) said on Monday that the global economy is facing what could be its biggest test since World War II, calling for a fight against geo-economic defragmentation.
Speaking on the first day of Davos, Kristalina Georgieva told participants in the World Economic Forum that trust in the global economic system has been on the decline amid rising tensions over trade, technology standards and security as the Russia-Ukraine war rages on.
International Energy Agency Executive Director Fatih Birol also pointed to increasing prices and said “we may see prices even going higher, becoming much more volatile and a major risk for the global economy”.
Indian Oil Minister Hardeep Singh Puri said oil prices of around $110 a barrel could pose bigger threats than inflation to the global economy.
'If oil prices remain at $110 per barrel, you are not just talking about inflation, then you're talking about bigger threats,' Puri said, warning against a potential economic recession.
'And if the global economy goes in that direction, everyone, including the oil producers, everyone will have to face the consequences, then inflation,' he said.
On the demand side, worries over weaker demand intensified as the Chinese capital extended its work-from-home policy to many of its 22 million citizens to combat a COVID-19 outbreak while Shanghai increased testing and curbs to maintain its 'zero-Covid' status after two months of lockdown.
Nonetheless, the market is hopeful of a demand increase ahead of the US summer driving season.
By Sibel Morrow