Crude Oil Gains 1% on Monday on Supply Concerns

Global oil prices appreciated in the early hours of Monday as a major pipeline supplying the United States remained shut amid Vladimir Putin’s threat of reducing production in retaliation for the Russian oil price cap.

Brent crude oil, against which Nigerian oil is priced, appreciated by 46 cents or 0.6% to $76.56 a barrel by 6 am Nigerian time. West Texas Intermediate crude oil also gained 57 cent or 0.8% to $71.59 per barrel.

The price gains on Monday for Brent and WTI follow declines in both grades last week to their lowest since December 2021 amid concerns that a possible global recession will impact oil demand.

“Oil prices are higher as the Keystone pipeline remains shut, China’s COVID controls ease and on concerns that Russia could reduce output,” said Edward Moya, a senior market analyst for OANDA.

On Sunday, Canada’s TC Energy said it had not yet determined the cause of the Keystone oil pipeline leak last week in the United States. It gave no timeline as to when the pipeline would resume operation.

The 622,000 barrel-per-day Keystone line is a critical artery shipping heavy Canadian crude from Alberta to refiners in the U.S. Midwest and the Gulf Coast.

China, the world’s biggest crude oil importer, continued to loosen its strict zero-COVID policy, though streets in the capital Beijing remained quiet and many businesses stayed shut over the weekend, with residents saying a return to normal was a long way off.

Putin said on Friday that Russia, the world’s biggest exporter of energy, could cut production and would refuse to sell oil to any country that imposes a “stupid” price cap on Russian exports agreed by G7 nations.

While the uncertainty surrounding European Union sanctions on Russian oil and the related price cap kept volatility high on prices, the sanctions have had a limited impact on global markets so far, ANZ analysts said in a note.