Oil prices rose 2% on Monday after OPEC+ countries kept their production targets steady ahead of EU sanctions and a price cap on Russian crude.
At the same time, more Chinese cities eased COVID-19 restrictions over the weekend, in a positive sign for fuel demand.
Brent crude futures rose $1.84, or 2.2%, to $87.41 a barrel by 0142 GMT, while US West Texas Intermediate (WTI) crude futures rose $1.64, or 2%, to $81.62 a barrel.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, called OPEC+, on Sunday agreed to stick to their October plan to cut output by 2 million barrels per day (bpd) from November until 2023.
Analysts said the OPEC+ decision was expected as major producers waited to see the impact of the European Union’s import ban and the Group of Seven (G7) $60-per-barrel price cap Russia has imposed on any country. threatened to cut off supplies. The Cap.
“The decision reflects the unpredictability of supply and demand in the coming months,” analysts at ANZ Research said in a client note.
Wood Mackenzie Vice President Ann-Louise Hittel said in a note that the European Union would need to replace Russian crude with oil from the Middle East, West Africa and the United States, which would help oil prices to rise, at least in the near term. There should be a floor below. ,
“Prices are currently lower on expectations of slower demand growth despite EU oil import ban on Russian crude and G7 price cap. Prices are temporarily supported by EU ban and adjustment in price cap,” Hittel said. likely to meet.
A key factor that has weighed on demand is China’s zero-COVID policy, but restrictions have been eased to varying degrees following protests in several cities, including Beijing and Shanghai.
Hittel said the EU’s growing embargo on Russian oil products other than crude from February 5 should support crude demand in the first quarter of 2023, as diesel and heating oil remain tight on the market.
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