Oil prices rise on increased demand outlook

Oil prices rose on Tuesday on expectations of easing China Covid measures. Oil prices went up, with WTI prices climbing to $79.5 per barrel. 

Covid cases in China have finally started to drop, boosting the oil demand outlook and oil prices on Tuesday. After days of protests against the crippling Covid lockdowns, Chinese authorities finally seem ready to relax some of the harsh Covid restrictions. China eased some of its strident Covid regulations on Monday, although the government still maintains its zero-Covid policy. The uncertainty over oil demand in China has influenced oil prices considerably as China is the world’s largest energy importer and zero-Covid restrictions severely limit oil demand. 

G7 leaders have yet to decide on the Russian oil cap. G7 nations reportedly considered a price cap on Russian oil in the range of $65 - $70, which is above the current market level, but Poland is vetoing the cap. Such a price cap would not hinder trading Russian oil, making this sanction against Russia a little more than a gesture. G7 leaders, however, have so far failed to reach a consensus on the price cap, and talks have hit a dead-end. EU energy ministers could not decide on this issue, because their views diverged largely.

OPEC and OPEC-JMMC Meetings are scheduled for December 4th and may cause high volatility in oil prices. After recent statements by OPEC+ members, the organization is expected to continue oil production cuts into the next year to boost oil prices.

Unsubstantiated rumors that OPEC planned an oil hike, caused oil prices to plummet early last week. OPEC+ members were reportedly considering an increase of up to half a million barrels a day for January. Saudi Arabian officials denied the news, however, causing oil prices to recover quickly. Other OPEC producers, such as the United Arab Emirates and Kuwait, reaffirmed the organization’s commitment to oil production cuts. OPEC+ members hinted that the organization will likely maintain production cuts through 2023, boosting oil prices.

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Written by:
Myrsini Giannouli

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