Oil prices were slightly higher in early Asian trade on Tuesday morning, after the G7 price cap on Russian seaborne oil went into effect Monday (5/12/2022) on top of the European Union embargo on imports of Russian crude oil by sea.
Brent crude futures were up 66 cents to trade at $83.34 a barrel by 0108 GMT.
US West Texas Intermediate (WTI) crude futures rose 70 cents to trade at $77.63 a barrel.
The futures contract slumped more than 3 percent in the previous session, after data on the US services sector raised concerns that the Federal Reserve could continue its aggressive policy tightening path.
The Group of Seven (G7) price cuts come as the West tries to limit Moscow’s ability to finance its war in Ukraine, but Russia says it will not comply with the measure even if it means cutting output.
The price cap, which will be imposed by the G7 nations, the European Union and Australia, comes on top of an EU embargo on imports of Russian crude by sea and similar pledges by the United States, Canada, Japan and the United Kingdom.
Meanwhile, the Organization of the Petroleum Exporting Countries and allies including Russia, collectively known as OPEC+, agreed on Sunday (4/12/2022) to stick to their October plan to cut production by 2 million barrels per day (bpd) from November. .
The G7 countries and Australia last week agreed on a price cap of US$60 per barrel for seaborne Russian oil.
In China, more cities eased COVID restrictions over the weekend, boosting optimism for increased demand in the world’s top oil importer.
Business and manufacturing activity in China, the world’s second-largest economy, has been hit this year by stringent measures to curb the spread of the coronavirus.
