Brent Slides 1.5% Ahead OPEC+ Meeting, Russian Oil Ban

By Adedapo Adesanya

Brent crude slipped by 1.5 per cent or $1.31 to sell at $85.57 per barrel on Friday ahead of a meeting of the Organisation of the Petroleum Exporting Countries and its allies (OPEC+) on Sunday and a European Union (EU) ban on Russian crude on Monday.

Also, the US West Texas Intermediate (WTI) crude futures fell by $1.24 or 1.5 per cent yesterday to trade at $79.98 per barrel.

Despite the negative outcome, both benchmarks notched their first weekly gains at around 2.5 per cent and 5 per cent, respectively, after three consecutive weeks of drops.

OPEC+ is widely expected to stick to its latest target of reducing oil production by 2 million barrels per day when it meets on Sunday.

Talks begin on Saturday when OPEC ministers hold a virtual meeting at 1100 GMT (12 pm Nigerian time). OPEC+ begins talks at the same time on Sunday with a meeting of the advisory Joint Ministerial Monitoring Committee (JMMC) panel, followed by the full ministerial conference.

The group agreed in October to cut its production target by 2 million barrels per day, or about 2 per cent of world demand, from November until the end of 2023.

Now, it may want to assess the impact of the looming Russian oil price cap on the market and get a clearer picture of demand in China, the world’s top crude importer, where an easing of stringent COVID-19 restrictions is expected after unprecedented demonstrations.

Also, on the supply front, Russian oil output could fall by 500,000 to 1 million barrels per day early in 2023 due to the EU ban on seaborne imports from Monday.

Poland agreed to the EU’s deal for a $60 per barrel price cap on Russian seaborne oil, allowing the bloc to approve the deal over the weekend formally.

European Commission President, Ursula von der Leyen, said the Russian oil price cap would be adjustable over time so that the union can react to market developments.

However, China is set to announce an easing of its COVID-19 quarantine protocols within days, which would be a major shift in policy in the world’s second-biggest oil consumer.

Projections from analysts warn that a significant economic reopening is likely months away.