Oil declines as traders measure price cuts in Saudi Arabia, G-7 ban on crude oil

(Bloomberg) – Oil fell as investors weighed in on the Group of Seven’s promise to ban imports of Russian stockpiles due to Saudi Arabia’s cuts in official prices and the impact of disruptive measures in China.

Most read from Bloomberg

West Texas Intermediate traded below $ 109 a barrel, after previously hovering between 0.7% growth and a loss of as much as 1.7%. Leaders of the most industrialized countries have vowed to suspend imports from Russia in response to President Vladimir Putin’s war in Ukraine. A similar plan by the European Union, ie the EU, has yet to be completed amid Hungary’s objections.

Saudi Arabia has lowered prices for buyers in Asia because blockades due to coronavirus in China are burdening consumption in the largest importer. State-controlled Saudi Aramco cut prices for the first time in four months, lowering its key Arab Light rating for next month’s flow to $ 4.40 a barrel above the reference value.

Oil has had a turbulent year as Russia’s invasion of its smaller neighbor has reversed global commodity markets, raising prices. The United States and Great Britain have already banned the import of Russian fuel in response to the attack, but the promise of the G-7 for the weekend will further increase the pressure on Moscow. Wider markets were also upset by the aggressive increase in the Federal Reserve rate, adding volatility to crude oil trading.

“Although the risk remains distorted upwards, recent developments are likely to keep the crude oil volume focused on refined products,” said Ole Hansen, head of commodity strategy at Saxo Bank. The Chinese Covid epidemic and rising interest rates are offsetting continuing concerns about supplies from Russia, he added.

Repeated attempts by China to stop the Covid-19 outbreak by closing urban centers, including a key center of Shanghai, have reduced energy consumption. Highlighting the economic damage, Prime Minister Li Keqiang warned over the weekend of a “complicated and serious” employment situation.

However, oil markets are still in decline, the bullish pattern marked by short-term prices that are higher than those further. The range between Brent’s two closest December contracts was $ 13.75 a barrel, close to the level seen in the first weeks after Russia began its invasion.

Most read from Bloomberg Businessweek

© 2022 Bloomberg LP

Leave a Comment