OPEC+ and China premium in oil

OPEC+ did not change its decision to reduce production by 2 million barrels per day. The EU's sanctions and price ceiling application against Russian oil are in effect. In this environment, oil prices have also increased. Oil prices started the new week with a premium due to the news flow from OPEC+ and China. US crude oil tested above $81 and Brent oil above $87 on the first trading day of the week. The Organization of the Petroleum Exporting Countries (OPEC), known as OPEC+, and its partners responded to the increasing volatility and uncertainty in oil markets by keeping production steady. OPEC+ officials, who met in a virtual meeting on Sunday, did not change the plan they had reached in the previous meeting to reduce production by 2 million barrels per day. Following the decision to cut 2 million barrels per day at the OPEC+ meeting in October, US President Joe Biden accused the Saudi Arabian administration of supporting Russia in its war in Ukraine with this decision. “The decision was taken entirely in line with market assessments and, in retrospect, market participants considered it necessary and the right course of action to stabilize global oil markets,” OPEC+ said in a statement on Sunday. Meanwhile, the European Union’s sanctions on Russian oil are also coming into effect as of today. The G-7 countries agreed at the last minute to impose a ceiling price of $60 per barrel on Russian oil. Anyone who wants to access the services provided by the bloc, especially insurance, will have to pay this price or less. The same will apply to European tankers, especially the giant Greek fleet. Russian Deputy Prime Minister Alexander Novak warned that his country could “cut back on oil production somewhat” in response. According to UBS Group AG, the EU’s decision to ban some Russian oil imports by sea will have an impact on the country’s production “in December and moderately.” Another development closely watched by oil markets is China’s easing of mandatory COVID-19 testing, especially in Shanghai. Oil prices are starting the new week on the rise in light of these developments. "It remains unclear whether the plan will ensure a smooth flow of Russian barrels to Asian markets or whether there will be significant disruption. Any clear sign that Russia is ready to cut oil exports could send prices higher in the coming days," analysts at RBC Capital Markets wrote in a note, referring to the price cap.