Oil faltered as investors weighed a promise by the Group of Seven to ban imports of Russian crude against a cut in official prices by Saudi Arabia and the impact of China’s energy-sapping lockdowns.
est Texas Intermediate was trading near $110 a barrel after earlier losing as much as 1.7 percent.
Leaders of the most industrialized countries made the vow in response to President Vladimir Putin’s war in Ukraine after holding a video call with Ukrainian President Volodymyr Zelenskyy on Sunday.
A similar EU plan has yet to be agreed as some members object.
Saudi Arabia slashed prices for buyers in Asia as coronavirus lockdowns in China weigh on the top importer’s consumption.
State-controlled Saudi Aramco cut prices for the first time in four months, slashing its main grade Arab Light for next month’s deliveries to $4.40 a barrel above the benchmark it uses.
Crude oil had a tumultuous year as Russia’s invasion of its smaller neighbor turned global commodity markets upside down and sent prices higher.
The US and UK have already taken action to ban imports of Russian fuel in response to the attack, but the G7’s weekend pledge will add further pressure on Moscow.
Commodity prices were also shaken as leading central banks, including the US Federal Reserve, tightened policies to quell a surge in inflation.
“Expect some price decline as the EU struggles to reach unanimity on a Russian oil ban,” said Vandana Hari, founder of oil analysis firm Vanda Insights. However, the downside could be limited as the bloc continues its consensus efforts and keeps the market on edge, she added.
Oil’s resilience in the week’s opening session came despite a shift towards risk aversion in financial markets and another gain for the US currency amid growth concerns.
A stronger dollar can undermine demand for commodities like crude oil by making commodities more expensive for foreign buyers.
G7 leaders pledged to phase out Russian oil on the eve of Russia’s Victory Day on May 9, which commemorates the nation’s role in defeating Nazi Germany in World War II.
The date has become a touchstone in the Kremlin’s campaign to win public support for the invasion.
“This is an extremely difficult decision for a country that imports most of its energy,” said Japanese Prime Minister Fumio Kishida. “But this is a time when G7 unity is more important than anything else.”
The EU’s plan to follow suit with its own ban on Russian crude oil is still being discussed, despite objections from Hungary.
A meeting of the bloc’s 27 ambassadors ended Sunday without an agreement, and talks are expected to resume in the coming days. A ban on Russian oil shipments to third countries may also be postponed until G7 countries commit to similar action.
China’s repeated attempts to halt the outbreak of Covid-19 by locking down urban centers, including the key hub of Shanghai, have reduced energy consumption.
Referring to the economic damage, Premier Li Keqiang warned of a “complicated and serious” employment situation over the weekend.
Still, oil markets remain in backwardation, a bullish pattern characterized by near-term prices that require a premium over prices further out.
The spread between the next two December Brent contracts was $13.75 a barrel, about the same level seen in the first few weeks after the Russian invasion began.
https://www.independent.ie/business/world/oil-swings-as-traders-weigh-up-g7-crude-ban-saudi-price-cuts-41629773.html Oil falters as traders weigh G7 crude ban and Saudi price cuts