Oil prices rose sharply on Friday mounting concerns that it could take weeks to dislodge a giant container ship blocking the Suez Canal, possibly squeezing supplies of crude and refined products.

Prices, however, were still headed for a third consecutive weekly loss, with the outlook for demand dented by fresh coronavirus lockdowns in Europe.

Brent crude was higher by 54 cents, or 0.9 percent, at $62.49 a barrel by 04:32 GMT, after dropping 3.8 percent on Thursday.

US West Texas Intermediate (WTI) crude was up 65 cents, or 1.1 percent, at $59.21 a barrel, having tumbled 4.3 percent a day earlier.

Both benchmarks were on track for a weekly loss of about 3 percent, following a more than 6 percent decline last week.

The trapped container ship is blocking traffic in the Suez Canal, one of the world’s busiest shipping channels for oil and refined fuels, grain and other trade between Asia and Europe.

Officials stopped all ships entering the canal on Thursday, and a salvage company said the vessel may take weeks to free.

Tight supply vs weak demand

“Fears of supply tightness grew as the key Suez Canal remained blocked by the giant ship, outweighing concerns over weak demand due to lockdowns in Europe and Asia,” said Satoru Yoshida, a commodity analyst with Rakuten Securities.

Of the 39.2 million barrels per day (bpd) of total seaborne trade in crude in 2020, 1.74 million bpd went through the Suez Canal, according to tanker tracking firm Kpler. Additionally, 1.54 million bpd of refined oil products such as gasoline and diesel fuel flow through the canal, about 9 percent of global seaborne product trade, Kpler said.

Expectations that the Organization of the Petroleum Exporting Countries and its allies, known as OPEC+, will likely maintain their lower production also supported prices, Nissan Securities researcher Yasushi Osada said.

The producer group is scheduled to meet on April 1 to decide on May supplies, and OPEC+ sources told the Reuters news agency they expected the producer group to broadly stick to current lower levels, as the outlook for demand has deteriorated due to new lockdowns in Europe.

Acting a week ahead of the OPEC+ meeting, Abu Dhabi National Oil Company (ADNOC) has deepened crude oil supply cuts to Asian customers in June to 10-15 percent from 5-15 percent in May, several sources with knowledge of the matter said on Thursday.

Countries in Europe are renewing restrictions to curb the spread of COVID-19, which will likely reduce fuel demand from the region. Germany, Europe’s largest economy, has seen its biggest increase in coronavirus cases since January.

In parts of western India, authorities ordered people indoors as new infections hit the highest level in five months.

The grounding of a container ship in the vital waterway has blocked traffic, raising fears of crude supply disruptions.