The black viscous hydrocarbon prices increased on Friday as traders anticipated that OPEC+ would discuss output cuts at their meeting on September 5. However, worries over the U.S, Europe, Japan, and Canada capping Russia’s oil and the state of the world economy also hung over the market.
The price of Brent crude futures increased by 66 cents to reach $93 per barrel, while the price of WTI crude futures in the United States increased by 26 cents to reach $87 per barrel.
The day before, both benchmarks dropped 3% to two-week lows. WTI saw a weekly decline of 6.7% while Brent fell 7.9%.
On a weekly chart, it can be seen that U.S. crude futures exceeded last week’s high before declining and closing below it.
G7 to place price ceiling on Russian oil
The G7 finance ministers agreed to place a price ceiling on Russian oil on Friday, but they offered few new specifics about the strategy intended to limit funding for Moscow’s conflict in Ukraine while maintaining crude flow to prevent price rises.
- The G7 group of nations’ finance ministers announced they would prohibit the provision of “services which enable maritime transportation of Russian-origin crude oil and petroleum products globally” above the price cap. The G7 countries are the United States, Japan, Canada, Germany, France, Italy, and the United Kingdom. That might prevent funding or insurance for oil shipments.
- They stated in a joint statement that “a broad coalition” of nations will decide on the maximum price. Along with the upcoming round of sanctions from the European Union, it would go into force in early December and forbid the import of Russian oil via water.
- Consequently, the Organization of the Petroleum Exporting Countries and allies led by Russia, sometimes known as OPEC+, are scheduled to meet on September 5 against the backdrop of anticipated decreases in demand, even if supply is still tight according to top producer Saudi Arabia.
- At its meeting on Monday, OPEC+ is likely to maintain its oil output caps for the month of October, according to three OPEC+ sources. However, some sources did not completely rule out a production cut to support oil prices, which have fallen from their record highs earlier this year.
- This week, OPEC+ updated market balances for this year and now expects demand to outpace supply by 400,000 barrels per day (bpd), down from the prior prediction of 900,000 bpd. In its base case scenario for 2023, the producer group projects a market deficit of 300,000 bpd.
Iran claimed that its response to American suggestions to revive the 2015 nuclear agreement between Tehran and the P5+1 powers was “constructive.” The United States evaluation was less enthusiastic.
The effects of the most recent COVID-19 limitations in China continue to worry investors. On Thursday, the city of Chengdu issued a lockdown that has impacted businesses like Volvo.
According to data, Chinese factory activity decreased in August for the first time in three months as a result of weaker demand; power outages and COVID-19 outbreaks also caused production to be disrupted.
