Prices in the oil market continue to fluctuate. The fluctuations are caused by uncertain prospects on the supply side and the EU oil embargo may lead to its sharp decrease.

On Wednesday morning, oil quotations started to grow steadily after yesterday's crashing fall. The day before, oil closed trading at a one-week low.

The cost of benchmark oil fell by 5.2% each on Tuesday. June futures on Brent dropped by $5.91 to $107.25 and May futures on WTI fell by $5.65 to $102.56.

The pressure on the commodity market was put by the strong US dollar. Yesterday, the US dollar index rose to the highest level in 2 years.

The greenback was supported by the hawkish Fed policy. Now more US central bank officials are voting for a more aggressive tightening of monetary policy.

Another negative factor for oil was the revised growth forecast for the global economy from the International Monetary Fund.

Given higher inflation expectations, the IMF has significantly lowered the reading for 2022. This is a bad sign for oil, predicting a possible decline in energy demand.

Expectations that demand may exceed supply, on the contrary, are strengthening the quotations of oil. Thus, on Monday, they reached a monthly high amid the news about the suspension of crude shipments in two ports of Libya.

This has raised already high supply concerns in the oil market. The escalation of the Russian-Ukrainian conflict these days could force the EU to sharply refuse to import crude from Russia.

What is the threat of this? According to estimates of the US bank JPMorgan, an abrupt rather than gradual introduction of the embargo will force more than 4 million barrels of oil out of the market. In conditions of acute shortage, oil prices may soar by 65%, up to $185.

By comparison, Europe's phase-out of Russian oil would reduce supply by 2.1 million barrels by the end of the year. In this case, it is unlikely that the price of oil will be able to reach another record-high level.

Nevertheless, experts remain bullish on oil prices. In the medium term, quotes may increase due to increased demand for crude in China.

Investors are now concerned that the easing of restrictive measures in China will lead to a recovery in the auto and air transport industries.

According to the latest data, traffic activity in China's capital city has already exceeded 100% of its 2019 level. Once the lockdown eases, the indicator may grow several times over.

Shanghai announced this morning that it has again weakened the strict quarantine regulations imposed due to the COVID-19 outbreak. This news instantly sent oil prices skyrocketing.

At the time of writing, the price of Brent rose by 1.19%, to $108.53, and WTI jumped by 1.25%, to $103.33.