Russia is considering imposing a ban on selling its oil to countries participating in Western sanctions
Wednesday – 1 Shaaban 1444 AH – 22 February 2023 AD Issue Number [16157]
London: «Asharq Al-Awsat»
Oil prices rose during trading on Tuesday, supported by optimism about the return of Chinese demand, the largest importer of oil in the world, which covered the rise of the dollar.
With China’s oil imports likely to reach a record high in 2023 and demand from India, the world’s third largest oil importer, rising amid tight supplies, eyes are now turning to monetary policy in the world’s largest economy and oil consumer.
Brent crude rose 1.08 percent to $83.90 a barrel. At 14:54 GMT, US West Texas Intermediate crude rose 0.8 percent to $77.73. The dollar index is heading towards recording an increase for the fourth week in a row, and has risen 1.7 percent since the beginning of February, but it has settled at about 104, retreating from its highest level in six weeks, which it recorded on Friday, at 104.67. A rising dollar makes commodities priced in the US currency more expensive for buyers who hold other currencies.
Dealers are awaiting the minutes of the last meeting of the Federal Reserve, scheduled for release today, Wednesday, as data on core inflation raised the risk of interest rates remaining high for a longer period.
Analysts say that oil prices may rise in the coming weeks due to a lack of supply and a recovery in demand, despite the obstacles in the near term such as raising US interest rates.
OANDA analyst Edward Moya said Chinese demand for Russian crude had returned to levels from the beginning of the war in Ukraine. He added, according to Reuters: “The West will try to pressure China and India to search for alternative sources, which would keep the oil market in a state of scarcity.”
Russia plans to cut oil production by 500,000 barrels per day, equivalent to approximately 5 percent of its production, in March after the West imposed ceilings on Russian oil and oil prices. Yesterday, Russian Deputy Prime Minister Alexander Novak said that his country is still studying the possibility of banning the sale of its petroleum products to countries that adhere to Western sanctions against them by imposing a price ceiling, according to the Russian Interfax agency.
And according to what was reported by Bloomberg News, Russian ministries and companies are still studying the possibility of implementing this option. Novak said that Russian oil production has remained stable so far during the month of February, while refining productivity declined by several percentage points compared to last January.
The Interfax news agency said earlier that the reduction in Russian oil production would be proportionately shared by the companies.
Meanwhile, the European Statistics Agency (Eurostat) said yesterday that the European Union countries have reduced gas consumption by 19.3 percent since last summer, exceeding the consumption target set by the European bloc.
It is noteworthy that after Russia reduced gas exports to the European bloc in the wake of the invasion of Ukraine, European countries pledged to reduce demand by 15 percent during the months between last August and next March, compared to the same period during the previous five years.
An assessment for the months from August to January showed that 22 of the 27 countries cut demand by 15 percent or more. According to Eurostat, Finland, Lithuania and Sweden recorded the largest reductions of -57.3%, -47.9% and -40.2%, respectively.
Other countries reduced gas consumption, but by less than the targeted target, namely Slovenia (-14.2%), Spain (-13.7%) and Ireland (-0.3%).
Only two countries in the European Union recorded an increase in demand, namely Slovakia, with an increase of 4.6 percent, and Malta, with an increase of about 11.9 percent.
