By Laura Sanchez
Investing.com – These are intense days for oil, with trading at around $81 and at around $86.
Investors are therefore keeping an eye this week to see what levels oil can reach. We recall that this commodity has fallen from $120 at the beginning of June to below $90 currently.
Now, weakening demand for crude oil in China and rising fears of a global economic recession have been added to by sanctions on oil.
“This week, oil will be highly volatile,” says Bankinter.
As of Monday, the embargo imposed by the European Union on Russian oil comes into force, an embargo that is accompanied by the limitation of oil prices to around $60 a barrel.
“The objective of the West is that Russia cannot finance the war in Ukraine with the income generated by the sale of crude oil”, according to Link Securities.
Russia, for its part, is going on the counterattack and will stop selling crude to the countries that have signed the agreement.
The $60 per barrel cap is close to the current price of Russian oil, which means that Moscow could continue to sell while rejecting the cap in principle.
“If Russia ends up taking off more oil than about a million barrels per day, then the world becomes short on oil, and there would need to be an offset somewhere, whether that’s from OPEC or not,” highlights Jacques Rousseau, managing director of Clearview Energy Partners, in remarks picked up by ABC News. “That’s going to be the key factor — is to figure out how much Russian oil is really leaving the market,” he added.
It should also not be forgotten that Russia is an active part of OPEC+, and at its meeting this weekend the cartel decided to maintain its production cut of 2 million barrels per day.
“How these measures may influence the supply of crude oil and the price of this raw material remains to be seen. At the moment, everything points to the fact that it may have an impact on Russian oil production, but not so much on its oil supply, which is why the price of oil has reacted only slightly upwards,” Link Securities added.
“OPEC mentioned that Russia has been able to sell practically all the production that was going to Europe to countries such as China and Turkey,” according to Renta 4.
In terms of levels, Warren Venketas, analyst at DailyFX, explains that “daily Brent crude price action reveals a long upper wick at present but the rest of the day will confirm whether this candlestick persists which will bring into consideration the 85.00 support handle. Fundamentally, supply concerns could be pointing to higher prices but markets will remain wary until there is further clarity around Russia’s reaction function.”
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