- Oil falls from a three-week high amid low liquidity
- Feb ’23 WTI is trading marginally higher this morning, around $79/Bbl
- Russia responds to the G7 price cap with an oil sales ban
- The market continues to weigh China’s reopening despite a surge in new Covid cases
- There are ongoing concerns about how smoothly China will reopen and if the nation can maintain the eased restrictions
- AEGIS notes that oil demand could see an uptick in the world’s largest oil importer after the initial Covid waves
- TC Energy has received regulatory approval to restart the remaining segment of the Keystone pipeline; however, the company said work could take “several days” to bring it online
- Russia bans oil sales to countries that comply with the G7 price cap (BBG, WSJ)
- Putin banned the export of oil and oil products to foreign buyers yesterday who accept the price cap mechanism
- The restrictions on crude are scheduled to come into effect on February 1 and last through July 1, 2023
- A separate ban on refined oil products like gasoline and diesel would go into effect at a later announced date
- According to the decree, the restrictions apply to “supply contracts that directly or indirectly use the mechanism of setting a price cap” and are “in force at all stages up until the final buyer”
- Russia’s flagship crude is already trading below the $60/Bbl cap set by the G7 nations, meaning most trade can continue regardless of the restriction
- Still, according to Deputy Prime Minister Alexander Novak, Russia's oil production could decline by 0.5 – 0.7 MMBbl/d in early 2023, or 5%–6% of the country's current output