Oil prices gained on Monday as a key North American pipeline stayed shut while Russia threatened to cut production in response to a price cap on its exports.
Brent, the benchmark for two thirds of the world’s oil, was 0.8 per cent higher at $76.68 at 9.45am UAE time. West Texas Intermediate, the gauge that tracks US crude, was up 1 per cent at $71.75 a barrel.
On Thursday, the Keystone pipeline, which transports Canadian crude to refiners in the US Midwest and the Gulf Coast, was shut down after more than 14,000 barrels of crude oil spilled into a creek in Kansas.
TC Energy, which operates the 622,000 barrel-per-day oil link, said it would only resume service with regulatory approval.
“Our teams continue to actively investigate the cause of the incident. We have not confirmed a timeline for restart,” said the company on Sunday.
Prices also edged up on reports that Russian President Vladimir Putin had threatened to cut oil production in response to the G7 price cap on Moscow’s crude exports.
The Group of Seven advanced economies agreed on a price cap of $60 per barrel earlier this month, following weeks of negotiations.
Russian oil exports rose to 7.7 million bpd in October, up 165,000 bpd from the previous month, on higher shipments to the EU, China and India, the International Energy Agency said.
Brent crude lost about 10 per cent of its value last week as concerns of a recession in several European economies and slowing growth in China weighed on the demand outlook.
“The short-term crude demand outlook has deteriorated significantly as no one has a strong handle on how bad a recession will hit the US economy,” Edward Moya, senior market analyst at Oanda, said.
“China’s Covid situation also remains a big concern as the end of their Covid zero strategy could cripple their health system.”
China is easing nationwide Covid-19 rules, the first set of widespread reforms to its zero-Covid policy since rare protests erupted late last month.
Analysts have said that oil prices could find a floor at $70 a barrel, with the US having previously indicated that it would refill its Strategic Petroleum Reserve when crude falls to between $67 and $72.
“Energy traders are going to trade very technically here and probably look to defend the $70 level for WTI crude,” said Mr Moya.
Opec+, the alliance of 23 oil-producing countries, aims to reduce market fluctuations and will continue to focus on stability in the year ahead, Saudi Arabian Energy Minister Prince Abdulaziz bin Salman said on Sunday.
The alliance's decision to cut production by 2 million bpd on October 5 proved to be the right one, given recent developments, he told a forum in Riyadh on Sunday after the kingdom's 2023 budget announcements.
