Following a deal by the G7 and its allies to cap the price of Russian oil at $60 (£49) per barrel, oil prices increased on Monday.
In trade in Asia, Brent crude increased by almost 1% to above $86.
The decision, which might go into effect on Monday, increases Western pressure on Russia over its invasion of Ukraine.
After agreeing to uphold its policy of reducing output in the face of slowing global growth and rising interest rates, the group of oil producers known as Opec+.
According to Kang Wu of S&P Global Commodity Insights, “Opec+’s decision to maintain the quota where it is…is by itself an implicit kind of support to the oil market.”
Russia is one of the 23 oil-exporting nations that make up Opec+. Opec+ meets frequently to decide how much crude oil should be sold on the international market.
Additionally, traders are responding to the positive US jobs report and the relaxation of Covid restrictions in several Chinese locations.
Following widespread protests over the nation’s zero-Covid policy, other Chinese cities, like Urumqi in the north-west, have announced they will slacken regulations.
According to Stephen Innes, managing partner at SPI Asset Management, early morning optimism has been sparked by the notion that China may expedite plans for reopening.
With China’s reopening, he advised against chasing oil higher, since there will be a large rise in Omicron cases, which might put mobility on the downswing at least into the first quarter of next year.
The G7 and Australia said last week that the $60 ceiling on Russian oil would take effect on Monday or “very shortly thereafter.”
They continued by saying that the goal of the action was to “prevent Russia from benefitting from its war of aggression against Ukraine.”
The price cap, proposed by the G7 in September, attempts to prevent Moscow from making money off of oil exports while preventing a price increase.
Only Russian oil purchased for less than $60 per barrel will be permitted to be transported using tankers from the G7 and EU, insurance firms, and financial institutions.
The fact that many significant shipping and insurance companies have their headquarters within the G7 could make it challenging for Moscow to sell its oil at a higher price.
The G7 is a grouping of the seven biggest so-called “advanced” economies in the world, which control trade and the global financial system. They are the UK, the United States, France, Germany, Italy, Japan, and Canada.
On worries that the supply may be harmed by Russia’s invasion of Ukraine, oil and gas prices have skyrocketed.
Russia, which supplies almost a third of Europe’s needs with crude oil, is the world’s second-largest producer behind Saudi Arabia.
Russia has vowed to reject the price cap and threatens to stop supplying oil to nations that do so.
On Monday, a maritime import embargo on Russian crude oil will go into effect throughout the EU.
Russia will undoubtedly feel the effects of the sanctions, but the blow will be somewhat lessened by its decision to sell its oil to other markets, like India and China, which are now the two biggest consumers of Russian petroleum.
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