The U.S. and some of its allies want to keep the price limit on Russian oil at $60 a barrel during a planned review of the price limit, with Estonia, Lithuania and Poland in favor of reducing it to $40-50 dollars, Bloomberg reported. 

European Union extends sanctions against Russia until July 31

The United States and its allies plan to wait until early spring to consider modifying the terms of current restrictions on the crude oil price ceiling from Russia. For now, the current limits will remain at $60 a barrel. At the same time, Poland, Lithuania and Estonia argue that these restrictions should be tightened. They argue that the cost per barrel of Russian oil should not exceed $40. 

The three countries in a statement available to the agency, said that while the oil price cap “works,” the mechanism should be used further. It also raised the issue of a ban on Russian energy imports. 

From December 5, 2022 the oil sanctions of the Western countries came into effect: the European Union stopped accepting Russian oil transported by sea, and the G7 countries, Australia and the EU imposed a price cap on it at $60 per barrel for sea transportation – more expensive oil is prohibited to transport and insure. Russia, in response, banned from February 1 this year to supply oil to foreigners, if the contracts directly or indirectly provided for the use of the mechanism of fixing the marginal price.

Earlier, we reported that Brent oil prices exceeded $89 per barrel for the first time since December 2022.

March Brent crude oil contracts are priced at $89.01 a barrel, data from the Intercontinental Exchange ICE show. This is 1.56% higher than the price at the close of trading on January 22. Crude Brent oil prices today exceeded the threshold of $89 for the first time since December 1, 2022.

Brent oil price forecast

The price of Brent was about $86.94 per barrel at its low on January 23. March WTI crude oil price rose 0.65% to $82.17 per barrel as of 19:58 Moscow time.

Oil has been rising in price for the third session in a row, said Oleg Syrovatkin, a leading analyst at the global research department of Otkritie Investments. Prices are supported by the prospects of strengthening of demand from China, concerns about possible reduction of supplies from Russia, and the weakening of the dollar against the currencies of G10.In this case the volume of trades is low today because of the celebration of the Lunar New Year in China, the expert points out.

Oil prices have shifted upward after a weak start at the beginning of 2023 as China, the largest consumer of fuel, announced the cancellation of the policy of “zero covid” and increased import quotas, causing analysts to expect an increase in demand, writes Bloomberg. Also, they expect prices to rise because of a possible softening of the U.S. Federal Reserve’s policy of raising interest rates.

Against this backdrop, Russian oil exports by sea declined last week, the agency wrote. Also, the $60 a barrel price ceiling on Russian oil, introduced last December, is still in effect. It is applied to Russian oil delivered by sea. Starting from February 5, it is planned to introduce a price ceiling on supplies of oil products of Russian origin, but its level has not been agreed upon yet.

Earlier, we reported that global demand for oil will reach a record level in 2023.

According to analysts of the International Energy Agency (IEA), the global oil demand will reach a record high of 101.72 million barrels per day this year, writes Anadolu observer Firdevs Yuksel.

He noted that in his monthly report on the IEA oil market, the forecast for Brent crude oil demand for 2023 was revised upward by 80,000 bpd compared to the previous forecast.

Analysts believe global oil demand will increase by 1.87 million bpd this year from last year to reach 101.72 million bpd. This number is seen as the highest level of all time.

It is reported that 50 percent of the anticipated increase in global oil demand will come from China on the back of the phasing out of anti-coke restrictions.

Analysts also forecast that jet fuel will still be the largest source of growth with an increase of about 840,000 barrels per day.

According to the IEA, global oil production last month decreased by 860 thousand barrels per day compared to the previous month, to 101.01 million barrels.

As for OPEC’s daily crude oil production last December, it fell by 40 thousand barrels to 29.019 million barrels compared to the previous month. At the same time, unconventional OPEC production other than crude oil was at 5.29 million barrels per day. Thus, OPEC’s daily oil production last month was 34.48 million barrels.

Non-OPEC production during the reporting period decreased by around 780,000 bpd to 66.52 million bpd compared to the previous month, Anadolu writes.

Earlier we reported that Bloomberg learned about the U.S. desire to maintain the level of the oil price ceiling.