Ahead of G7 Meetings on Russian Exports, Oil Prices Rise

On a choppy day on Monday, oil prices began to decline as traders prepared for any actions against Russian oil and gas exports that may result from a gathering of the Group of Seven (G7) leaders in Germany.

G7 leaders should also discuss a renewal of the Iran nuclear agreement, which may result in additional Iranian oil shipments; hence, the risk of more supply tightness hung over the market as western nations explored methods to reduce Russia’s ability to pay for its conflict in Ukraine.

When they meet in August, members of the OPEC+ will probably adhere to a plan for rapid oil output rises. However, because of a spate of dismal economic reports from the United States, the world’s largest oil user, the urgent supply problems now outweigh mounting anxieties about the possibility of a worldwide recession.

Fluctuations In the Oil Market

By 0632 GMT, Brent oil futures had decreased 8 cents to $113.04 per barrel after rising 2.8 percent on Friday. Following a 3.2 percent increase in the previous session, U.S. West Texas Intermediate oil traded at $107.38 per barrel, down 24 cents, or 0.2 percent.

For the second week in a row, both futures declined last week. Meantime, the dollar surged and interest rate increases in important markets stoked recessionary worries. Although the backwardation in prompt monthly spreads remained significant, oil prices are comfortably maintained at over $100 per barrel. Delivery prices will soon be higher than delivery rates in later months. This is a sign of limited supply and is known as backwardation.

The West wants to lower Moscow’s income while minimizing the harm to other economies. Hence, these measures may include a price ceiling on Russian oil exports. Vivek Dhar, an analyst at Commonwealth Bank of Australia (OTC: CMWAY), wrote in a note that It’s uncertain if a price ceiling can accomplish this goal.