An announcement from a US Treasury official on Tuesday stated that the Group of Seven nations would soon release the Russian oil price cap level, adding that there would likely be an adjustment a few times a year.
The price cap level, which is part of Russia’s sanctions for its Ukrainian invasion, was set to be implemented on December 5 by the G7.
Through this sanction, the G7 aims to reduce Russia’s revenue from its petroleum products, which the country uses to fund its war efforts. This price cap level should also help prevent price sparks in the market by maintaining the flow of Russian oil without completely cutting it off.
The official also stated that Russia would have no reason to retaliate by withholding exports as doing so would risk damaging their oil fields. Consequently, it also means that Russia would not be able to forcibly drive the prices up as such action would impact their new customers, such as India and China.
API to Begin Another Larger-Than-Expected Crude Draw
After a 5.8 million drop a week prior, the American Petroleum Institute released data that showed a drop of another 4.8 million barrels in the crude oil inventories, which surpassed the analyst expectation of only 2.2 million barrels.
Although the API data showed that US crude inventories had grown by around 21 million barrels this year, it became irrelevant as the country’s Strategic Petroleum Reserves have fallen by almost 10 times that figure at 203 million barrels so far this year.
Saudi Denies Oil Output Hike, OPEC might Continue to Cut
Saudi Arabia reportedly denied the news of an output hike on Monday, saying that OPEC would continue its output cut and would take further measures to ease the market amid the falling price.
An earlier report on Monday said that there would be a discussion with OPEC and its allies about an output hike of around 500,000 barrels per day in the next meeting.
However, a report quoted Arabian Energy Minister Prince Abdulaziz bin Salman stating that OPEC does not discuss anything ahead of a meeting.
Furthermore, the quote from the prince also added that the current cut by OPEC would continue until 2023 and that they would always be ready to intervene if ever needed.