By Adedapo Adesanya
Oil prices were up on Monday, shaking off weaker demand expectations as countries head into the winter season.
Brent crude futures appreciated by $1.16 or 1.3 per cent to trade at $94.00 per barrel while the United States West Texas Intermediate (WTI) crude grew by 99 cents or 1.1 per cent to close at $87.78 per barrel.
US Treasury Secretary, Ms Janet Yellen, said Americans could experience a spike in gas prices in the winter when the European Union (EU) significantly cuts back on buying Russian oil, adding that a proposed Western price cap on Russia’s oil exports is being designed to keep prices in check.
“It’s a risk, and it’s a risk that we’re working on the price cap to try to address,” Ms Yellen told CNN.
The possible price increase could come because the EU will cease for the most part buying Russian oil and impose a ban on services that allow Russia to ship oil by tanker, she said.
This is happening as the global oil supply is expected to tighten further when the EU embargo on Russian oil takes effect on December 5.
Also, the G7 will implement a price cap on Russian oil to limit the country’s oil export revenue, seeking to punish Moscow over the invasion of Ukraine, while taking measures to ensure that oil could still flow to emerging nations.
The EU’s executive European Commission is due on Wednesday to unveil a package of measures to help power firms facing a liquidity crunch.
The market also got a boost as data out of the US, the world’s largest oil consumer and producer, showed that emergency oil stocks fell 8.4 million barrels to 434.1 million barrels in the week ended September 9. This is the lowest level since October 1984, according to data released on Monday by the US Department of Energy (DOE).
Some top countries said they had serious doubts about Iran’s intentions to revive a nuclear deal. Failure to revive the 2015 deal would keep Iranian oil off the market and keep global supply tight.
Meanwhile, China’s oil demand could contract for the first time in two decades this year as Beijing’s zero-COVID policy keeps people at home during holidays and reduces fuel consumption.
