Brent Slides to $85.4 Ahead of OPEC+ Meeting
Brent crude futures fell to $85.4 per barrel on Friday, as investors await the Organisation of Petroleum Exporting Countries and allies (OPEC+) meeting on Sunday. Despite some speculation that major oil producers could cut output further, the cartel is expected to stick to its latest target of reducing oil production by 2 million barrels per day.
Meanwhile, the latest data from Baker Hughes showed US oil rig count, an indicator of future production remained unchanged this week. Poland agreed to the EU’s deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to move forward with formally approving the deal over the weekend.
For the week, oil rose about 5%, the first weekly gain since early November, benefiting mainly from China’s softening stance on Covid that sparked hopes for a rebound in demand from the world’s top crude importer.
On the supply side, the latest data showed that US crude inventories fell by nearly 13 million barrels last week, the most since June 2019. WTI crude futures fell to $80 per barrel on Friday, as investors await the OPEC+ meeting on Sunday.
EU Govt Approve Price Cap on Russian Oil
All European Union governments completed on Saturday the written approval of a $60 per barrel price cap on Russian seaborne oil, the European Commission said, paving the way for its publication in the EU’s Official Journal and entry into force on Dec. 5.
The measure, an idea of the Group of Seven nations, comes on top of the EU’s embargo on imports of Russian seaborne crude that also kicks in on Dec. 5, and is meant to allow oil-related services to third countries only for those cargoes below the cap.
“It will also help us to stabilise global energy prices, benefiting countries across the world who are currently confronted with high oil prices,” she said.
The price cap will prohibit G7 companies dealing with the insurance, re-insurance or financing of oil trade or to handle Russian crude oil cargoes to third countries unless the oil was sold at or below the $60 per barrel price cap.
From Monday, the EU itself will not be buying any Russian seaborne crude, which had made up 94% of all Russian crude imports by the 27-nation EU.
The bloc will also stop any imports of Russian petroleum products from Feb. 5. A G7 price cap on the petroleum products will also be set at a later date, using exactly the same mechanism as for crude oil, the Commission said.
From Monday, EU shipping companies will only be allowed to carry Russian crude if it is sold below or at the G7 price cap, which will be reviewed every two months, starting from mid-January, to keep it at least 5% below the market price.
Because the world’s key shipping and insurance firms are based in G7 countries, the price cap would make it very difficult for Moscow to sell its oil at a higher price. READ: EU Oil Imports from Africa Rise on Plan to End Russia Deals
Since the final details of the price cap are set so near to its implementation, cargoes of Russian crude loaded onto tankers before Dec. 5 will be exempt from the restrictions for 45 days, or until Jan. 19.
If the price cap changes after the regular review mechanism, there will be a 90-day grace period to ensure that no vessel is caught at sea carrying oil bought at a price that is not accepted.
The price cap review is an EU-specific mechanism that will require unanimity among the 27 countries that make up the bloc for any changes to the price level. Once a change is agreed by the EU, it will be then discussed at the G7 level, which includes also the United States, Canada, Britain and Japan. # Brent Slides to $85.4 Ahead of OPEC+ Meeting