RIYADH: Oil prices fell on Tuesday as fresh COVID-19 curbs in China, the world’s biggest crude importer, and fears of a global economic slowdown weighed on the fuel demand outlook.
Brent crude futures for September fell $1.35, or 1.3 percent, to $105.75 a barrel by 0305 GMT, while US West Texas Intermediate crude for August delivery was at $102.64 a barrel, down $1.45, or 1.4 percent.
Russian oil price cap failure could jack up oil prices
The global price of oil could surge by 40 percent to around $140 per barrel if a proposed price cap on Russian oil is not adopted, along with sanction exemptions that would allow shipments below that price, a senior US Treasury official said on Tuesday.
US Treasury Secretary Janet Yellen will discuss the implementation of the US price cap proposal and global economic developments with Japanese Finance Minister Shunichi Suzuki when they meet later on Tuesday, the official said.
The goal was to set the price at a level that covered Russia’s marginal cost of production, so Moscow is incentivized to continue exporting oil, but not high enough to allow it to fund its war against Ukraine, the official said.
Japanese officials had expressed concern about the price cap being set too low but had not rejected a potential price range of $40 to $60 per barrel outright, the official said.
Yellen is using her first trip to the Indo-Pacific region as treasury secretary to build support for the proposed price cap on Russian oil.
She will also answer nagging questions about the efficacy of the proposed cap if India, China and others buying cheap Russian oil don’t participate.
In June, the US, the Group of Seven rich nations — Britain, Canada, Germany, France, Italy and Japan — and the EU agreed to explore imposing the cap to reduce Moscow’s revenues and deplete its war chest, but details are still being worked out.
India’s Russian oil imports in June surge to record high
India’s oil imports from Russia surged to a record of around 950,000 barrels per day in June, accounting for nearly a fifth of overall imports by the world’s third-largest oil consumer, data provided by trade sources showed.
Indian refiners have been snapping up Russian oil sold at hefty discounts to Brent and Middle East staples after some Western companies and countries shunned purchases from Moscow following its invasion of Ukraine on Feb. 24.
India shipped in about 4.8 million bpd of oil in June, down 3.8 percent from May but about 23 percent higher than a year earlier, the data showed. Last year, India’s oil imports were low as a second deadly coronavirus wave hit fuel demand.
Oil imports from Russia rose 15.5 percent in June from May, while those from Iraq and Saudi Arabia dropped by 10.5 percent and 13.5 percent, respectively, dragging the share of the Middle East to 56.5 percent from 59.3 percent, the data showed.
Russia continued to be the second-largest oil supplier to India after Iraq, while Saudi Arabia remained in the third spot for the second month in a row.
(With input from Reuters)