By Adedapo Adesanya
The oil market appreciated on Friday as investors, who had taken short positions, took profits, as the United States sanctions on some Russian oil shippers lent support.
As a result, Brent crude futures grew by 4.1 per cent or $3.19 to close at $80.61 a barrel, while West Texas Intermediate (WTI) crude futures rose by 4.1 per cent or $2.99 to finish at $75.89 per barrel.
Still, both benchmarks ended the week more than 1 per cent lower, their fourth straight weekly decline, mostly weighed down by a rise in US crude inventories and sustained high production.
The US imposed sanctions on maritime companies and vessels for shipping Russian oil sold above the G7’s price cap, as the world’s largest oil producer closed loopholes in the mechanism designed to punish the Russians for their war in Ukraine.
The US Treasury Department, in a statement, said it slapped sanctions on three United Arab Emirates-based companies and three vessels owned by them in the action, accusing the vessels of engaging in the export of Russian crude oil priced above the $60 a barrel cap.
It said the vessels used US-person services while transporting the Russian-origin crude oil.
Business Post reports that the US along with other Group of Seven (G7) countries and Australia imposed the cap last year, seeking to reduce Russia’s revenues from seaborne oil exports as part of sanctions for its invasion of Ukraine.
However, the rise in global oil prices this year meant that much Russian oil has traded above the cap even as the cap on crude has been in place for around a year to curtail Russia’s oil revenues.
China put pressure on the market as its property crisis deepened as new home prices fell for the fourth straight month with dozens of cities hit by declines.
An indicator for the world’s biggest oil importer, this was the most since the peak of the COVID-19 pandemic in the country last year, suggesting a broader weakening in the sector that could drag on the country’s overall recovery.
With Brent below $80, many analysts expect the Organisation of the Petroleum Exporting Countries (OPEC+), particularly Saudi Arabia and Russia, to extend output cuts into 2024.
The OPEC+ group is set to consider whether to make additional oil supply cuts when the group meets later this month, on November 26.
Members of OPEC+, including Nigeria, have already pledged total oil output cuts of 5.16 million barrels per day, or about 5 per cent of daily global demand, in a series of steps that started in late 2022. The cuts include 3.66 million barrels per day by OPEC+ and additional voluntary cuts by Saudi Arabia and Russia.
