By Adedapo Adesanya
Prices of crude oil were up on Friday, closing a week marked by worries about Chinese demand and haggling over a Western price cap on Russian oil.
Brent crude futures were up by 22 cents or 0.3 per cent to trade at $85.56 a barrel, while the United States West Texas Intermediate (WTI) crude futures were up by 43 cents or 0.6 per cent to $78.37 a barrel.
China, the world’s top oil importer, on Friday, reported a new daily record for COVID-19 infections, as cities across the country continued to enforce mobility measures and other curbs to control outbreaks.
The Asian nation is navigating stricter COVID-19 control curbs as the country reported another record high of daily infections just weeks after hopes had been raised of easing measures.
The resurgence of COVID cases in China, with 32,695 new local infections recorded for Thursday as numerous cities report outbreaks, has prompted widespread lockdowns and other curbs on movement and business, as well as pushback.
This is as China’s COVID response is taking a mounting toll on the world’s second-largest economy.
The announcement of 20-point measures, just as rising cases prompted an increasingly heavy response under China’s strict zero-COVID approach, has caused widespread confusion and uncertainty in big cities, including Beijing, where many residents are locked down at home.
This is starting to hit fuel demand, with traffic drifting down and implied oil demand around 1 million barrels per day lower than average.
Meanwhile, Group of Seven (G7) nations and European Union (EU) diplomats have been discussing a Russian oil price cap between $65 and $70 a barrel, but an agreement has still not been reached ahead of talks expected to resume on Friday.
The plan is to limit revenue to fund Russia’s war in Ukraine without disrupting global oil markets.
Analysts noted that the proposed price cap of $65-$70 a barrel on Russian oil would have a little immediate impact on Moscow’s revenues, as it is broadly in line with what Asian buyers are already paying.
For instance, India, which is now Russia’s second largest customer, is paying the equivalent to a discount of around $25 to $35 a barrel to international benchmark Brent crude for Russian Urals crude.
The market will be anticipating moves ahead of the next meeting of the Organisation of the Petroleum Exporting Countries and allies, OPEC+, on December 4, while a ban on Russian oil is due to come into effect on December 5 when an EU ban on Russian crude kicks off.
Dipo Olowookere