Oil Is Bouncing
Oil prices rose on Monday after falling by more than $2 a barrel the previous session, as optimism about the Chinese economy outweighed concerns about a global recession.
Following the easing of mobility restrictions, China, the largest crude oil importer in the world, is currently experiencing the first of three anticipated waves of Covid-19 cases; however, Beijing plans to increase economic support in 2023. There is no doubt that demand is being influenced negatively.
The term “responsibility” refers to determining whether a person is responsible for their actions.
Oil hit a record high of $147 a barrel earlier this year after Russia invaded Ukraine. Since then, most of this year’s gains have been lost as recession worries have replaced supply concerns as the main factor influencing prices.
Interest Rates Rose Last Week
The US Federal Reserve and the European Central Bank promised further increases. Meanwhile, the Bank of Japan may abandon its ultra-dovish stance when it meets on Monday and Tuesday. On Friday, the US Energy Department announced that it would begin repurchasing crude for the Strategic Petroleum Reserve, the first purchases since the reserve released a record 180 million barrels this year. According to the state-run TASS news agency, the Kremlin stated on Monday that it was still debating the course of action it would take in response to the West’s imposition of a $60 per barrel price cap on Russia’s oil exports.
Last week, Kremlin spokesman Dmitry Peskov told reporters that Moscow planned to issue a presidential decree outlining its response, which could include a ban on selling oil to countries that meet the cap.
Officials, including President Vladimir Putin, have strongly criticized the move and threatened to halt exports to countries that adhere to the cap. However, Peskov said on Monday that Russia was still considering other options.
EU Gas Price Cap
European Union nations are in crunch talks to cap gas prices this morning, with energy ministers appearing optimistic about a deal after two months of difficult negotiations.
For three days, Europe’s primary benchmark for natural gas prices exceeds 188 euros ($200) per megawatt hour.
On Monday morning, ministers referred to the action as a “gas market correction mechanism” rather than a cap. This name refers to the proposal in the draft text. In August, European natural gas prices reached historic highs of around 350 euros per megawatt hour.
Opinions on the appropriate level of the cap and the dangers of market intervention to the eurozone’s financial stability vary. On December 5, the EU imposed a complete ban on the import of Russian oil by sea into the area. It will take similar action in early February against Moscow’s other oil products. A price cap on natural gas could lead to instability in the financial markets. The finance minister of Estonia stated that she was “positive” that they could reach a compromise but added that it was challenging to predict what it would entail. She hoped that “good news” would be available by Monday evening.