RIYADH: Oil prices drifted lower in early trade on Monday, thinned by the Lunar New Year holiday in east Asia, but held on to most of last week’s gains on the prospect of an economic recovery in top oil importer China this year.
Brent crude futures were down by 25 cents, or 0.29 percent, to $87.38 at 08.20 a.m. Saudi time, while US West Texas Intermediate crude futures fell 21 cents, or down 0.26 percent, to $81.43 a barrel.
Last week Brent rose 2.8 percent, while the US benchmark logged a 1.8 percent gain.
Pakistan could start importing Russian oil after March
Russia could start exporting oil to energy-starved Pakistan after March if terms are agreed, and is discussing with Islamabad whether the payment could be made in the currencies of “friendly” countries, Russia’s energy minister said.
Pakistan has been battling a balance of payment crisis with foreign exchange reserves falling to $4.6 billion, barely enough to cover three weeks of imports — mostly for oil.
It said in October it was considering buying discounted Russian crude, citing neighboring India, which has been purchasing from Moscow.
Pakistani officials and Russian Energy Minister Nikolay Shulginov, who is in Islamabad for an annual inter-governmental commission on trade and economy, said the key elements of the deal had yet to be agreed upon.
“As for the supply of crude oil and petroleum products, we conceptually agreed on the development and signing of an agreement that will determine and resolve all issues of logistics, insurance, payment, volumes,” Shulginov told reporters in Russian, according to the Russian state news agency RIA Novosti.
Shulginov also said “negotiations are going on” about settlement in the currencies of “friendly” countries, meaning non-Western countries that have not imposed economic sanctions on Russia in response to its invasion of Ukraine. Oil is generally paid for in dollars.
Shulginov said the two sides had “established a timeline of this agreement in our joint statement — which is late March,” according to RIA.
Pakistan junior oil minister Musadik Malik told local Geo News TV separately that Islamabad wanted to import 35 percent of its total crude oil requirement.
G7 agrees to review level of price cap on Russian oil in March
Group of Seven officials have agreed to review the level of the price cap on exports of Russian oil in March, later than originally planned in order to give time to assess the market after more caps are placed on oil products from Russia, the US Treasury said on Friday.
The G7 economies, the EU and Australia agreed on Dec. 5 to ban the use of Western-supplied maritime insurance, finance and brokering for sea-borne Russian oil priced above $60 per barrel as part of Western sanctions on Moscow for its invasion of Ukraine.
The coalition plans on Feb. 5 to set two caps on Russian oil products, one on products that trade at a premium to crude, such as diesel or gas oil, and one for products that trade at a discount to crude, such as fuel oil.
“The Deputies agreed that this approach will better calibrate the price cap policy for refined products, given the wide range of market prices at which these products trade,” Treasury said after US Deputy Treasury Secretary Wally Adeyemo met virtually with coalition officials on Friday.
The coalition had initially planned to review the level of the cap sometime in February, two months after its implementation.
Treasury officials have said the oil price cap has two goals: cutting Russia’s revenues by institutionalizing heavy discounts on its oil bought by big consumers like China and India, and ensuring global oil markets are well supplied.
“As long as the price cap continues to meet the Coalition’s dual goals, the Deputies agreed to undertake a review of the level of the crude price cap in March,” Treasury said.
The March date allows the coalition to assess developments in global markets after the implementation of the refined products caps, and to be briefed on an EU technical review of the crude price cap, it said.
(With input from Reuters)