LONDON (Reuters) – Oil prices rose 3 percent on Monday after OPEC+ countries kept their production targets stable before the European Union embargo and the start of a cap on Russian crude prices for the Group of Seven.
Meanwhile, in a positive sign for fuel demand in the world’s largest oil importer, more Chinese cities eased COVID-19 restrictions over the weekend.
Brent crude futures rose $2.53, or 3%, to $88.10 a barrel by 1330 GMT. West Texas Intermediate crude futures rose $2.40, or 3%, to $82.38.
The Organization of the Petroleum Exporting Countries (OPEC) and allies including Russia, called the OPEC+ community, agreed on Sunday to stick to October’s plan to cut production by two million barrels per day from November until 2023.
“The decision … is not a surprise, given the uncertainty in the market about the impact of the December 5 import ban on crude oil from Russia and the G7 price cap,” said Anne-Louise Hittle, vice president at consultancy Wood Mackenzie. .
“In addition, the producer group faces downside risks from the potential for weakening of global economic growth and China’s non-COVID policy.”
The G7 countries and Australia agreed last week to a cap of $60 a barrel for Russian oil carried by sea.
Business and manufacturing activity in China, the world’s second-largest economy, has been hit this year by strict measures to curb the spread of the coronavirus.
Analysts warn that the continued slowdown in the Chinese economy may reverse gains in oil prices.
“From an OPEC+ perspective, it cannot be easy to make reliable forecasts against this backdrop and the ever-evolving Covid situation in China, which currently looks much more promising from a demand perspective,” said Craig Erlam, senior market analyst at OANDA.
(Reporting by Noah Browning) Additional reporting by Sonali Paul in Melbourne and Emily Chow in Singapore
Our standards: Thomson Reuters Trust Principles.
“Internet practitioner. Social media maven. Certified zombieaholic. Lifelong communicator.”