Crude oil trading alert: Nord Stream-1 equipment is at risk of explosion! Price limit on Russian oil to $44/barrel?

By    8 Sep,2022

At the beginning of the Asian session, U.S. oil shocked weaker, currently trading near $86.28/barrel; London Brent crude futures fell more than 2% on Tuesday as the prospect of more interest rate hikes and global epidemic measures will weaken fuel demand reignited market concerns, reversing a two-day rally brought about by OPEC+'s first production cut target since 2020, and the U.S. Treasury Deputy Secretary said $44/barrel may become a "guide price" for Russia The "guide price" for oil price restrictions.


FYI: Due to the Labor Day holiday, the weekly inventory reports from the American Petroleum Institute (API) and the Energy Information Administration (EIA) will be released on Thursday BST, one day later than usual.

Positive and negative factors affecting oil prices

[Saudi Arabia reduces official selling price of October Arabian light crude to Asia].

Saudi Aramco said Tuesday that the October official selling price (OSP) of the country's flagship Arabian Light crude sold to Asia was reduced by nearly $4 per barrel, the first price cut in four months.

The world's largest oil exporter raised its September OSP for Asia to a record high of a $10.95 premium for Arabian Extra Light over the Oman/Dubai average, as well as a $9.80 per barrel premium for Arabian Light crude. Saudi Arabia also reduced its OSP for Arabian Light to Brent crude to $2.70 per barrel for October to Northwest Europe, while OSP to the U.S. remained unchanged.

U.S. crude has been trading unsettled since Sunday due to the Labor Day holiday. U.S. crude prices are down more than 2 percent from prices at Monday's usual settlement time, according to Lufte Eikon data.

Tamas?Varga of oil broker PVM said, "With OPEC+ news in the market right now, the focus has shifted temporarily to economic and inflation concerns, two of the relevant factors being Thursday's ECB interest rate decision and the extended new crown seal control and by the Asian powers."

[EU ministers to discuss capping Russian gas prices on Friday].

EU energy ministers will meet on Friday to discuss capping Russian gas prices, Spanish Energy Minister Teresa Ribera said, adding that the EU executive committee has circulated proposals that include EU countries setting price caps for Russian gas delivered by pipeline or by sea. A draft document seen by Reuters shows ministers will consider various options, including setting a price cap on imported gas, a price cap on gas used for power generation or temporarily removing gas-fired power plants from the EU's current tariff-setting system.

[$44/barrel may be the "guiding price" for Russian oil pricing measures].

Deputy Secretary of the Treasury Adeyemo said in an interview that the U.S. will set an initial "guideline price" for Russia's oil price restrictions at $44 per barrel, which was previously estimated by Russia itself as the cost per barrel of oil. The $44 level will still encourage Russian oil production, but oil exporters will no longer be able to profit from the energy crisis they caused," Adeyemo said. We aim to reduce Russian oil revenues while allowing Russia to continue to export energy." As for how long the Russian oil price cap will remain in place and what the exact guideline price will be, it will be decided jointly by the coalition of countries participating in the plan.