OIL prices started the day with a 0.64% increase compared to Monday’s closing, ahead of the Organisation of Petroleum Exporting Countries and allies (OPEC+) meeting) on Wednesday.
The oil group producers will decide on the extent of their production cuts for November amidst a decline in global prices.
Today, the International benchmark Brent crude traded at $89.44 per barrel, gaining 0.65% from the closing price of $88.86 a barrel in the previous trading session.
American benchmark West Texas Intermediate (WTI), trading at $84.05 per barrel at the same time, increased 0.50% after the previous session closed at $83.63 a barrel.
Investors are awaiting the outcome of the OPEC+ meeting on Wednesday, Oct. 5, when the group will discuss production cuts of over 1 million barrels per day for November in line with its demand forecast.
There have been uncertainties in crude supply as fear of Iranian oil gradually fades. Contributing to supply uncertainty and price fluctuations, the EU sanctions on Russian oil will apply on Dec. 5 and refined product deliveries on Feb. 5.
Market players are monitoring how the current price caps on Russian oil exports and EU sanctions will alter the supply outlook.
Further blurring the supply market, the EU proposed a new package of ‘biting’ sanctions on Russia on Wednesday over its ‘escalation’ in the ongoing Ukraine war, including an oil price cap.
The new package lays “the legal basis for a Russian oil price cap for third countries, previously agreed by G7 countries, said European Commission President Ursula von der Leyen.
She said although the EU has banned seaborne Russian crude oil into the EU as of Dec. 5, some developing countries still need some Russian oil supplies at low prices.
‘This cap will help reduce Russia’s revenues and keep global energy markets stable,’ the European Commission president said.
Rising geopolitical tension in Eastern Europe is another factor that is overshadowing the supply outlook and leading to price fluctuations from sabotage on the Nord Stream pipelines that led to significant leaks into the Baltic Sea.
Four leaks in the Russian-owned Nord Stream 1 and Nord Stream 2 pipelines have been reported so far off the coast of Denmark and Sweden. Denmark and Sweden and the EU reported that signs showed the leaks were the result of deliberate activity and not accidental.
The Nord Stream 1 pipeline has been offline since Aug. 31 as Russia stopped natural gas deliveries through the pipeline due to “maintenance works.” Meanwhile, the rising value of the US dollar has been fueling price upticks for the whole week.
However, the greenback lost 0.35% since the previous close but nonetheless maintained 20-year highs at 111.76. READ: German City to Switch off Street Lighting over Energy Crisis
When the dollar gains in value against other currencies, oil trade is discouraged as dollar-denominated oil is more expensive for buyers.
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