Oil rose for the second week in a row, up nearly $3 a barrel on Friday after Moscow said it might cut crude production in response to the G7 price ceiling on Russian exports.
Brent crude was up $2.94, or 3.6%, to $83.92, while West Texas Intermediate (WTI) crude was up $2.07, or 2.7%, to $79.56 a barrel. Both indicators posted their biggest weekly gains since October.
Alexander Novak said on Friday that Russia could cut oil production by 5% to 7% by early 2023 in response to price ceilings.
According to traders, Russia’s Baltic oil exports could fall by 20% in December compared to the previous month, after the European Union and G7 countries imposed sanctions and price caps on Russian crude from December 5th.
Major refineries in the US have closed due to the extreme cold. Both crude oil demand and production could drop over the next few days due to disruptions from a severe winter storm that swept through large parts of the United States. Production halted in Texas and North Dakota, while several of the largest US refineries closed due to the extreme cold.
U.S. gasoline and ultra-low sulfur diesel futures rose more than 5% due to refinery production cuts and increased demand for heating oil.
A possible cut from Russia would further fuel the bull market. However, if global demand continues at its current pace, this cut could have a significant impact and stay in the $80 range.
By the way, there are also those who expect prices to rise above $100 a barrel next year amid Russia’s production cuts and the relaxation of COVID-related restrictions in China. The road will continue to be bumpy for higher prices though.
