After OPEC+ maintains output stability and imposes a Russian price cap, oil prices increase
At 09:45 GMT, WTI crude futures were up $1.40, or 1.8%, to $81.38 a barrel, while Brent crude prices were last up $1.51, or 1.8%, to $87.08 a barrel.
Oil prices increased on Monday as OPEC+ countries maintained their output targets ahead of a ban by the European Union and the implementation of a G7 price restriction on Russian oil.
At the same time, additional Chinese cities relaxed COVID-19 regulations over the weekend, which is encouraging for fuel demand in the top oil importer in the world.
Prices increased by as much as 2% earlier in the day, but further price increases have been limited for both the Brent and U.S. West Texas Intermediate (WTI) contracts.
At 09:45 GMT, WTI crude futures were up $1.40, or 1.8%, to $81.38 a barrel, while Brent crude prices were last up $1.51, or 1.8%, to $87.08 a barrel.
On Sunday, the Organization of the Petroleum Exporting Countries (OPEC) and its allies, which includes Russia, came to an agreement to uphold its October plan to reduce output by 2 million barrels per day (bpd) from November through 2023.
According to Ann-Louise Hittle, vice president of consultancy Wood Mackenzie, “the decision… is not a surprise, given the uncertainty in the market about the impact of the EU Russia crude oil import embargo and the G7 price ceiling.”
The producers’ group is also at risk from China’s zero-covid policy and the possibility of weaker global economic growth.
Last week, the Group of Seven (G7) nations and Australia decided to cap the price of seaborne Russian oil at $60 per barrel.
Due to stringent precautions taken to stop the coronavirus’s spread, China, the second-largest economy in the world, has seen a decline in business and manufacturing activity this year.
According to Leon Li, a CMC Markets analyst based in Shanghai, further economic stagnation in China could undo recent price increases for oil.
“China’s current economic figures are still weak. It is difficult to increase demand for crude oil, “Li stated.