By Adedapo Adesanya
Global oil benchmarks ended mixed as they pulled back from their lowest levels in nearly a year on Monday, with Brent crude losing 44 cents or 0.5 per cent to trade at $83.19 per barrel and the United States West Texas Intermediate (WTI) crude growing by 96 cents or 1.3 per cent to settle at $77.24 per barrel.
Prices went southwards following a weak outlook from China, where hundreds of demonstrators and police clashed on Sunday over strict COVID restrictions that have limited free movement among millions of residents.
Anti-COVID measures erupted across China, triggering a broad selloff in commodities and equity markets. The country has stuck with President Xi Jinping’s zero-COVID policy even as much of the world has lifted most restrictions.
Analysts note that a weakened demand out of China could spur the Organisation of the Petroleum Exporting Countries and allies (OPEC+), including Russia, to cut output after reducing supply in October.
They noted that the decision would depend on the trajectory of the oil price when OPEC+ meets and how much disruption is evident in markets because of sanctions coming from Europe.
OPEC+ will meet on December 4. In October. The group agreed to reduce its output target by 2 million barrels per day through 2023.
With the oil market’s structure looking increasingly weak, delegates from the group say additional reductions could be an option.
Group of Seven (G7) and European Union diplomats have been discussing a price cap on Russian oil of between $65 and $70 a barrel, with the aim of limiting revenue to fund Russia’s military offensive in Ukraine without disrupting global oil markets, and will meet again on Monday.
However, EU governments were split on the level at which to cap Russian oil prices, with the impact being potentially muted. The price cap is due to come into effect on December 5 when an EU ban on Russian crude also takes effect.
Dipo Olowookere