…As Oil Prices Fluctuate
Oil prices in the international market fluctuated slightly yesterday as demand concerns continued to rise after President Vladimir Putin said Russia would not ‘supply oil, gas, or coal to its own detriment.’
Putin responded to the price cap war initiated by the G7 countries on his country’s oil and gas exports, while addressing the seventh annual Eastern Economic Forum in Vladivostok, according to the state-run Tass news agency.
The National reported that Brent, the benchmark for two thirds of the world’s oil, trading 3.35 per cent lower at $89.72 per barrel at 7pm UAE time yesterday. West Texas Intermediate, the gauge that tracks US crude, was down 3.67 per cent, at $83.69 a barrel.
Oil prices had plunged to their lowest point since January in early trading on Wednesday. The slide came as the US dollar rallied to record levels and demand concerns grew after China, the world’s biggest energy importer, imposed strict movement restrictions to contain a resurgence in Covid-19 infections.
Global prices recovered after Mr. Putin’s remarks on Wednesday led to concerns about a supply constraint in the market, although they reversed their gains later in the day.
Also Read: G7 Price Cap: Russia To Focus More On Asia For Gas Sales
Putin said capping prices is “another stupidity, another non-market decision that has no prospects,” Mr. Putin said Russia “will fulfill the contracts, but will not supply oil, gas, or coal to its own detriment”, the Russian president said. He assured that Russia is coping with the economic, financial and technological aggression of the West.
“I’m talking about aggression, there’s no other word for it,” Putin said. The idea of an oil price cap seems difficult to implement, first to find enough willing participants and second to effectively govern its mechanisms given the loss of influence.
Oil had rallied on Monday after a decision by OPEC and its allies to cut production by 100,000 barrels per day for the month of October amid an anticipated global economic slowdown owing to the pandemic and rising inflation in developed economies.
Also Read: G7 Agrees On Oil Price Cap Against Russia
Europe’s face-off with Russia over the Ukraine war has exacerbated the continent’s energy crisis and reverberated across markets.
Russia indefinitely suspended natural gas flows through the Nord Stream 1 pipeline into Europe, piling more pressure on the continent’s energy supplies and deepening the recession risks in the EU.
In addition to gas, Europe also imports crude oil from Russia. EU countries are phasing out these purchases, with an embargo set to take effect in December, in tandem with G7 attempts at implementing the price cap on Russian crude.
Also Read: UK Hits Target, Achieves Zero Fuel Imports From Russia
Meanwhile, the US dollar, in which international oil is priced, also hit a record high on Wednesday against major currencies, amplifying inflationary pressures and putting more pressure on the euro, sterling, the yen and yuan.
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