- Oil prices rise although everyone looks to the Fed this week.
- In the US, gasoline demand falls due to inflation.
- Sanctions on Russia continue to weigh on the price of black gold in Europe.
Oil started the week opening higher on the back of a moderately weaker dollar and a rise in the financial markets, which are still waiting for an increase in interest rates in the United States. This increase (expected at 75 points) would weaken fuel demand.
The price of oil has been subject to great volatility in recent weeks for this reason, as rising interest rates limit economic activity and reduce demand for fuels.
This situation is already a fact of life in the United States; gasoline demand has declined in North America in the middle of summer.
In Europe, interruptions in the crude oil trade from Russia have also led to a drop in fuel consumption, which has caused prices to soar due to inflation.
Profits for oil companies are expected to be lower than in other quarters. Fears of a worldwide recession are not being allayed in this regard.
Short-term supply shortages are estimated, the differential closed at $4.62/bbl last Friday, at record highs.
Libya’s National Oil Corporation (NOC) stated that the production target set is 1.2 million barrels per day (bpd) in two weeks from 860,000 bpd.
However, tensions in the African country continue to rise following local clashes between different political factions this weekend.
Europe remains tied to Russia’s energy future
The European Union communicated that Russian state-owned companies would be allowed to resend oil under an adjustment of sanctions agreed among the member states. This decision is in response to try to limit the risks of energy supply from Russia, which retaliated against the energy sanctions by Western countries.
Despite this decision the governor of the Russian Central Bank, Elvira Nabiulina informed the press that her country will not send oil to countries that decide to impose a price cap on their oil
“Future expectations are for Russian oil supply to decline in the coming months, as the expected plans for a price cap on Russian oil may have the opposite effect,” said Warren Patterson, head of commodities and strategy at ING.
Thus the conflict still seems far from being resolved.
