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Oil worried by uncertainty over China



(New York) Oil prices, boosted Tuesday by the tension on the Russian offer, between Western sanctions and replicas of Moscow, fell on Wednesday during very light exchanges while the announced reopening of China worries.

A barrel of Brent from the North Sea for delivery in February fell 1.26% to 83.26 dollars.

Its American equivalent, a barrel of West Texas Intermediate (WTI) for delivery the same month, lost 0.71% to 78.96 dollars.

Moscow’s announcement on Tuesday of a ban on the sale of its oil to foreign countries that use the price cap for Russian black gold only momentarily boosted prices.

Russia has said that it will not sell its oil to foreign countries, capping the price of its barrel at 60 euros, as the European Union, the G7 and Australia want to impose.

“What did you want them to say?” That they were going to comply with these demands? quipped Bill O’Grady of Confluence Investment, who saw little impact on this Russian decision. India and China are already buying Russian oil below the price cap.

It was rather the reopening of China that began to worry operators.

If Beijing has announced the upcoming lifting of quarantine for travelers, the spread of COVID-19 in the country may cause restrictions on entry into their territories from other countries, such as the United States.

“In the long term, the reopening of China is very promising for the oil market, but in the short term, there are a lot of sick people,” said Bill O’Grady. “In the short term, this reopening could prove to be a negative factor for the prices” of oil “but that will pass”, he assured.

Oilytics analysts pointed out how difficult it has become to judge the state of the oil market “due to the huge unknowns of Russia and China”.

For 2023, “all indicators point to a supply deficit, but the risk of a global recession could change this forecast,” they said.

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