Crude Oil Edges Higher; G7 Meeting in Focus

  • Commodities News
Crude Oil Edges Higher; G7 Meeting in Focus
Credit: © Reuters.

By Peter Nurse -- Oil prices edged higher Monday as traders look to the ongoing G7 meeting for further moves to limit the funding Russia gets from its oil exports.

By 9 AM ET (1300 GMT), U.S. crude futures traded 0.2% higher at $107.84 a barrel, while the Brent contract rose 0.5% to $109.61 a barrel.

U.S. Gasoline RBOB Futures were up 0.2% at $3.7887 a gallon.

The leaders of the Group of Seven continue to discuss ways to tackle rising energy prices, with measures mentioned including a possible price cap on Russian crude and oil products exports, which could further disrupt a very tight global market.

“However, it would likely take some time to come to an agreement. It would require the EU to renegotiate its last round of sanctions, and some member countries may be reluctant to do so, given how long it originally took EU countries to finalize its Russian oil ban,” said analysts ING, in a note.

The group is also expected to consider the possibility of reviving the Iran nuclear talks after the European Union's foreign policy chief met senior officials in Tehran to try to unblock the stalled negotiations, potentially allowing the resumption of Iranian crude onto the export market. 

“Given that talks have been on and off for the last year or so, we expect that discussions will likely be drawn out, and so we are assuming that the supply of Iranian oil will only start increasing in early 2023,” ING added.

Although the addition of Iranian oil could help ease the overall tightness of the market, this could be balanced by the difficulties Libya is having with its output as it grapples with protests that are forcing many oil fields and ports to shut down.

The country’s state oil company said Monday it may suspend exports from the Gulf of Sirte, which contains many of the OPEC member’s main ports, in the next three days amid a worsening political crisis.

The Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, are set to meet later this week, but additional output from this source is unlikely with the group expected to stick to the plan announced last month.

The crude market recorded its second consecutive losing week last week on concerns the aggressive tightening a number of central banks, the Federal Reserve in particular, are undertaking to curb inflation will severely limit global economic activity.

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