There’s so much uncertainty in the oil market
It’s already been a very volatile week in oil markets and that’s unlikely to change over the coming days given the immense uncertainty over the Russian price cap, China’s Covid stance, and the OPEC+ meeting. The market is being led speculatively and by leaks. Many have already been and will likely continue to be. This creates very lively conditions, given the many possible outcomes.
And as you’d expect, all of the above are linked to varying degrees. A record surge in Covid cases is leading to tightening restrictions weighing on activity, spurring protests, and forcing a rethink of the country’s zero-Covid policy. They’ve also weighed heavily on prices with China being the world’s second-largest economy which will impact the demand forecasts from OPEC+ unless the group opts to hold on and await more clear signals and data.
Also influencing the group’s analysis will be Russian sanctions, most notably the price cap which is yet to be fully agreed upon. Recent rumours indicate that the cap could fall to $62, which is significantly lower than the $65-70 previously reported and could have a larger impact on Russian output. Russia is, of course…