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Weekly Oil Dashboard: February 06, 2023.

Brent down ahead of embargo on Russian refined oil products

Crude oil prices fell sharply last week, ending the week below 80 $/b for Brent and 74 $/b for WTI. While the embargo on Russian refined oil products exported by sea came into effect on Sunday, the crude oil market remains bearish, with market fundamentals showing a global oversupply relative to demand that is slow to recover. On a weekly average, Brent and WTI are down by more than 4.5% to $82.9/bbl and $76.5/bbl respectively . The consensus of economists surveyed by Bloomberg as of 3 February is slightly higher with a median Brent price in 2023 of $87.8/b . Several financial institutions (Fitch, Goldman Sachs, Morgan Stanley) are forecasting a tightening of the oil market in the second However, several financial institutions (Fitch, Goldman Sachs, Morgan Stanley) expect the oil market to tighten in the second half of the year, which could push Brent above $100/b by the end of the year.


Online crude oil price: Brent and WTI market

 








 

Embargo on Russian oil products. More impactful than the Russian oil embargo?


After the embargo on coal in August 2022 and on crude oil at the beginning of December 2022, the countries of the European Union have decided to stop importing refined petroleum products (diesel, petrol, naphtha, paraffin, fuel oil, etc.) from Russia as of 5 February. On the same principle as for crude oil, the G7 countries also agreed to set a ceiling price above which the provision of technical assistance, brokerage services and insurance for the maritime transport of these products to third countries is prohibited. For light products, such as diesel, paraffin and gasoline, the ceiling was set at $100/bbl. For heavier oil products such as fuel oil the cap is $45/bbl. According to Argus, the price of Russian diesel is currently trading below this ceiling ($73/bbl Black Sea fob and $80/bbl Baltic fob), with the price of diesel in the US at $45/bbl. According to Argus, Russian diesel prices are currently trading below this ceiling ($73/bbl Black Sea fob and $80/bbl Baltic fob), i.e. $30-40/bbl below the price of European diesel.


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