By Sonali Paul and Isabel Kua

(Reuters) -Oil prices extended losses on Friday, burdened by the prospect of interest rate hikes, weaker global growth and COVID-19 lockdowns in China hurting demand, even as the European Union weighed a ban on Russian oil.

Brent crude futures were down $1.30, or 1.2%, at $107.03 a barrel at 0603 GMT, while U.S. West Texas Intermediate (WTI) crude futures had declined $1.27, or 1.2%, to $102.52 a barrel.

Both benchmark contracts were headed for weekly declines of around 4.2%.

This has been the least volatile week of trade since Russia launched its invasion of Ukraine on Feb. 24, sparking sanctions that cut Russian oil supply and led consuming nations to release a record volume of oil from emergency stocks. Moscow calls its actions in Ukraine a "special operation".

Concerns about the Ukraine conflict stoking inflation and denting economic growth dominated trading in the second half of the week, with the International Monetary Fund slashing its global growth forecast by nearly a full percentage point.

China's central bank governor, Yi Gang, said on Friday that the world's second-largest economy was not immune to external shocks and also faced pressure from COVID outbreaks.

The outlook for demand in China, the world's biggest oil importer, continues to weigh on the market, as Shanghai authorities launch a new round of city-wide testing and warn residents their three-week lockdown would be lifted only in batches once transmission is stamped out.

Adding to negative sentiment for oil, hawkish remarks from U.S. Federal Reserve Chairman Jerome Powell on Thursday pointing to aggressive interest rate increases drove up the U.S. dollar, making oil more expensive for buyers holding other currencies.

"Growth concerns in China are weighing on oil prices in Asia today, compounded by the equity selloff that swept U.S. markets overnight as fears increased that Fed tightening might push the U.S. into a slowdown as well," Jeffrey Halley, a senior market analyst at OANDA, said.

But all of that comes in a tight market, which could face even shorter supply if the European Union goes ahead with a ban on Russian oil.

This possible embargo, ongoing sanctions on Russia, and the supply shortfall caused by the Ukraine war will help oil prices to remain strong in the long run, said Tina Teng, an analyst at CMC Markets.