Oil prices drop ahead of U.S. rate hike
Oil prices dipped on Thursday as investors focused on the possibility of a significant rate hike in the United States, which may reduce inflation while reducing oil demand.
Brent crude futures for September fell from $2.21 to $97.36 per barrel after falling below $100 for the second day on Wednesday.
The price of West Texas Intermediate crude for August delivery in the United States was $93.61 a barrel, down more than 2%.
Oil prices have fallen in the last two weeks due to recession fears, despite a decline in Russian crude and processed product exports due to Western sanctions and supply disruption in Libya.
The Federal Reserve of the United States is expected to increase interest rates by 100 basis points this month in response to a dismal inflation report that showed price pressures rising.
Investors also rushed to the dollar, which is frequently regarded as a haven asset. On Wednesday, the dollar index reached a 20-year high, making oil purchases more expensive for non-US buyers.
Concerns over COVID-19 curbs in many Chinese cities to prevent new instances of a highly infectious subvariant have also kept oil prices under control.
China’s daily crude oil imports fell to their lowest level since July 2018 as refiners braced for tightening measures to reduce demand.
Data from the U.S. Energy Information Administration show that demand is also slowing, with product supply falling to 18.7 million barrels per day, the lowest since June 2021. Crude inventories increased as a result of another large release from strategic reserves.
U.S. Vice President Joe Biden will go to Saudi Arabia on Friday to attend a gathering of Gulf allies and call on them to pump more oil.
Russia warns that G7 attempt to cap oil price
According to Russian Foreign Ministry spokesperson Maria Zakharova, the Group of Seven’s efforts to restrict oil prices may cause them to soar. These plans are anti-market and dangerous. The cap system was proposed by U.S. Treasury Secretary Janet Yellen last month as part of an effort to pressure Moscow to cease what the Kremlin refers to as a “special military operation” in Ukraine. The final deal’s shape and price level have yet to be published.
The United States and the European Union have proposed limitations on Russian oil purchases as a kind of punishment.
Due to funding and logistics issues, Russian oil has sold at a significant discount to world grades.
Russian Urals mix costs roughly $75 per barrel, compared to Brent benchmark front-month futures at somewhat under $100. Russia had planned its budget for 2022 based on the Urals average price of $62.2 per barrel. President Vladimir Putin warned the West on Friday that continuing sanctions on Russia over the Ukraine conflict risked causing catastrophic energy price increases for consumers worldwide.
China Builds First Unmanned Offshore Oil Rig In South China Sea
There are no workplaces or housing quarters on the EP10-2 platform. As a result, it is far less expensive to build and operate, allowing oil corporations to drill fields that are too expensive for traditional rigs. This platform’s annual maintenance costs could be 10 million yuan (approximately $1.49 million) less than its manned counterpart. The platform is substantially smaller than a standard unmanned offshore oil rig. The deck is cut in half, and the overall weight is only two-thirds that of typical platforms.
Furthermore, the platform can operate under adverse situations like typhoons because it is primarily remote-controlled. That being said, the unmanned platform requires a high level of intelligence and stability. The China National Offshore Oil Corporation (CNOOC), which created this platform, stated that they installed ten smart systems on the rig to improve its sensing and remote-control capabilities. The CNOOC, founded in 1982, claims to be China’s largest unmanned offshore oil rig and gas producer. The company made its Shanghai Stock Exchange debut in April and did well at a relatively sluggish phase in the market cycle.
