- Oil reversed Friday’s losses on Monday morning
- WTI rose by $2.47/Bbl to trade above $82/Bbl amid supply concerns
- OPEC+ nations agreed to hold their output targets steady at their Sunday meeting
- The G7 nation’s price cap and the EU’s price cap on Russian crude kicked in today
- China continues to ease Covid curbs (BBG)
- Cities, including Shanghai, Shenzhen, and Chengdu, have scrapped PCR testing for entry into parks or public transport from today
- Despite increased cases in some areas of China, health officials have removed many testing booths in Beijing
- China’s easing of covid curbs supports oil prices as it indicates an impending recovery in oil demand in the largest crude-importing nation
- OPEC and its allies decided yesterday to maintain their current crude output cuts at 2 MMBbl/d through the end of 2023
- The move comes as OPEC+ anticipates a weaker global economy against a backdrop of interest rate hikes and increased inflation
- Al Mulla, Kuwait's Minister of Oil, also advised "continuous caution" amid this weaker backdrop
- A price cap of $60/Bbl on Russian crude was enforced on Monday, December 5, by the G7 coalition and the EU, following their Friday agreement (Reuters, BBG)
- According to the price cap, Russia can only export crude oil, ship it, and insure it using the services of Western companies if it sells it for $60/Bbl or less
- Starting in mid-January, the cap policy will be reviewed every two months and includes a resetting cap of at least 5% below average market rates
- Every change must get the unanimous approval of all EU members
- Moscow responded to the cap by saying it would not sell oil under the cap and that it was mulling an appropriate response
- "We are working on mechanisms to prohibit the use of a price cap instrument, regardless of what level is set, because such interference could further destabilize the market," said Russian Deputy Prime Minister Novak yesterday
- He also added, "We will sell oil and petroleum products only to those countries that will work with us under market conditions, even if we have to reduce production a little"
- In addition to the price cap, the EU has imposed an embargo on maritime imports of Russian crude, effective today
- The EU ban on seaborne Russian oil imports is part of a package of sanctions passed in June
- It includes barring maritime services — such as shipping insurance and financial services — on any tanker carrying Russian crude
- Hungary and a couple of other countries can continue to import Russian oil through pipelines
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Last Look - Oil soars by $20/Bbl in the third quarter driven by tightening supplies
