Adedapo Adesanya
By Adedapo Adesanya
The oil market reacted to plans by Russia to deeply cut its crude exports next month, with Brent rising by 2 per cent or $1.61 to trade at $82.21 a barrel, while the US West Texas Intermediate (WTI) rose by 2 per cent or $1.44 to $75.39 a barrel.
Prices got an early boost from Russia’s plans to cut oil exports from its western ports by up to 25 per cent in March, exceeding its announced production cuts of 500,000 barrels per day, according to Reuters.
Russia had already announced plans to cut its oil production by 500,000 barrels per day in March, amounting to 5 per cent of its output or 0.5 per cent of global production.
Officials said the voluntary output cuts in March would last one month and would follow the start of Western price caps on Russian oil on December 5 and oil products on February 5. The cut will be made from January output levels.
Russia has so far managed to reroute most of its oil exports from Europe to India, China, and Turkey, which happily snapped up cheap barrels and ignored Western sanctions.
However, the country has struggled to re-route exports of refined products away from Europe after Indian, Chinese, and Turkish refiners flooded the market with fuels produced from Russian oil.
Pressure also came on the back of a stronger American Dollar. The dollar index rose for the third straight session after minutes on Wednesday from the latest US Federal Reserve meeting showed a majority of Fed officials agreed the risks of high inflation warranted further rate hikes.
A stronger greenback makes oil, priced in the American currency, more expensive for holders of other currencies, hitting demand.
Oil prices also came under pressure after U.S. government data showed the country’s crude oil inventories rose for the ninth time in a row last week, stoking demand worries.
US crude stockpiles rose by 7.6 million barrels in the week to Feb. 17, the U.S. Energy Information Administration said, more than triple analyst expectations for a 2.1 million-barrel rise.
Meanwhile, analysts expect China’s demand for oil to pick up and lead to record imports this year, which has curbed the decline in oil prices. According to several large energy consultancies, China’s imports could surge by between 500,000 barrels per day and 1 million barrels per day this year, reaching 11.8 million barrels daily.
