By Stephanie Kelly

(Reuters) – After the International Monetary Fund cut its forecasts for economic growth, oil prices rose by around 1% on Wednesday.

However, demand worries have been countered by tighter supply prospects following the sanctions against Russia. Russia is the second largest oil exporter in the world and was a major European supplier after the invasion of Ukraine.

ANZ Research stated in a note that higher energy prices could lead to demand rationing. However, the strict Chinese lockdowns and COVID-zero approach to China are keeping prospects for demand subdued.”

The futures price rose 0.9% or 96cents to $108.21/barrel by 00.04 GMT.

WTI crude oil futures contracts for the front month expire Wednesday. They rose 1.2% to $103.75 per barrel, an increase of $1.19. Second-month contracts gained $1.18 or 1.2% to $103.23 per barrel

In volatile trading Tuesday, both benchmarks were down 5.2%. [O/R]

On Tuesday, the International Monetary Fund lowered its global growth forecast by almost a whole percentage point. It cited Russia’s economic impact on Ukraine and warned that inflation is now a “clear, present danger” to many countries.

The supply side of the equation, the Organization of the Petroleum Exporting Countries (OPEC+) produced 1.45 Million barrels per daily (bpd), below its March production targets. This was due to Russian output falling after sanctions imposed on the West. A report by the producer alliance, which was reviewed by Reuters, showed this.

Russia produced 300,000 more bpd than its March target at 10.018million bpd. This was based upon secondary sources.

Additional outages added fuel to supply concerns. The Libyan National Oil Corporation declared force majeure Tuesday at the Brega oil port, stating that it could not fulfill its oil market commitments.