
Jun 27, 2022 11:51PM ET
By: AnalysisWatch
Oil prices rose Tuesday morning in Asia amid tight supplies. However, leaders of the Group of Seven (G7) promised to put pressure on Russia while lowering energy prices.
WTI crude futures rose at 11:13 p.m. ET, up 1.21% to $112.32, while Brent oil futures rose 1.20% to $110.89. Oil prices remained above $110 a barrel as supplies of crude and oil products remained tight following sanctions imposed by the West on Russian oil.
G7 countries have pledged to stand by Ukraine "for as long as necessary." One of the new sanctions on Moscow's finances is a proposal to cap the price of Russian oil.
"I think if they were to put a price cap on the sale and purchase of Russian oil, I have a hard time imagining how that would be implemented, especially when China and India have become Russia's biggest customers," said Houston-based oil consultant Andrew Lipow.
Commonwealth Bank of Australia analyst Vivek Dhar had doubts about the move. He noted that nothing would prevent Russia from banning exports of oil and refined products to G7 countries in response to a price cap, exacerbating shortage conditions in global oil and refining markets.
A French presidency official suggested the international community explore all options to ease energy shortages, including talks with producing countries such as Iran and Venezuela. Oil exports from both OPEC members have been slowed by U.S. sanctions
In addition, interest rate hikes in major economies strengthened the dollar and fueled fears of a global recession.
Fears of a recession and interest rate hikes fueled volatility and risk aversion in futures markets. Some energy investors have stayed on the sidelines while crude spot prices have remained strong due to high demand and tight supply.
For now, pressing supply concerns outweigh growth concerns.
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