G7 move to impose price cap on Russian oil drives up crude oil

BL Mangaluru Bureau | | Updated on: Jun 29, 2022

OPEC+ meet likely to stick to modest hike in output this week

Supply constraints continued to impact the crude oil market, with Brent crude oil futures trading higher, and other crude oil futures marginally lower on Wednesday morning.

At 10.05 am on Wednesday, August Brent oil futures were at $116.79, up by 1.47 per cent; and August crude oil futures on WTI were at $111.30, down by 0.41 per cent.

July crude oil futures were trading at ₹8,784 on the Multi Commodity Exchange (MCX) in the initial hour of Wednesday morning against the previous close of ₹8,812, down by 0.32 per cent, and August futures were trading at ₹8,581 as against the previous close of ₹8,609, down by 0.33 per cent.

On Tuesday, the meeting of G7 economies decided to explore a ban on the transportation of Russian crude oil that is sold above a certain price level.

Tying up financial services

With this plan, the G7 economies are planning to tie financial services, insurance and shipping of crude oil from Russia to a certain price ceiling. Importers will be able to get these only if they commit to a set maximum price for Russian crude oil.

The Group of Seven economies feels that this will put further pressure on the Russian crude oil market, which is already facing sanctions from the US, the UK and other western nations.

Since Russia is a major producer of crude oil, any move to put pressure on its production will impact crude supplies in the in the global market, which is already facing a tight supply situation.

Meanwhile, OPEC (Organisation of Petroleum Exporting Countries) and its allies, commonly known as OPEC+, are likely to stick to their policy of modest output increases in their meeting scheduled this week.

Guarseed slips

July cotton futures were trading at ₹42,400 on the MCX in the initial hour of Wednesday morning, against the previous close of ₹42,120, up by 0.66 per cent.

On the National Commodities and Derivatives Exchange (NCDEX), July castorseed futures were trading at ₹7,358 in the initial hour of Wednesday morning, against the previous close of ₹7,350, up by 0.11 per cent.

July guar seed contracts were trading at ₹5,226 on NCDEX in the initial hour of Wednesday morning, against the previous close of ₹5,316, down by 1.69 per cent.

Published on June 29, 2022
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