WTI Crude : Oil traded near $88 per barrel on Monday and were headed for the first monthly gain since May, as investors braced for large OPEC + production cuts that threaten to tighten the market further heading into winter.
The crude oil cartel is set to reduce OPEC + output by 2 million barrels per day from November in a move largely seen as aimed at keeping prices high, though the group cited economic headwinds and the need to protect the oil industry.
The European Union ban on Russian oil is also set to take effect on Dec. 5 as part of broader sanctions for the invasion of Ukraine.
While Russia pulled out of a key United Nations-brokered grain deal, provoking international outrage and dealing a blow to attempts to ease a global food crisis triggered by Moscow’s invasion of Ukraine.
On Saturday Moscow said it was suspending participation in the Black Sea deal, which has sought to avert famine and tame inflation, in response to what it called a major Ukrainian drone attack on its fleet. In a conflict that began in February, Russia calls its actions in Ukraine “a special operation”.
Meanwhile, looming risks of a global recession and a weakening demand outlook continued to weigh on oil markets.
Persistent Covid-induced curbs in top crude importer China also clouded the outlook, as the country clings to the Covid Zero policy that has been a bane for its economy.
Elsewhere, Iran and Russia are set to discuss a $40 billion plan on Monday to develop oil and gas fields in Iran, Bloomberg reported.
The suspension of July’s Black Sea Grain Initiative will cut shipments from Ukraine, one of the world’s biggest grain exporters, from its crucial Black Sea ports this also effetced the global oil market.