Oil on Friday posted its largest weekly gain in four months after Russia followed through on a threat to cut production in response to Western energy sanctions.
Moscow said it would reduce output by 500,000 barrels, equivalent to about 5 percent of last month’s levels. The cut was the first major effect on Russian production from the swath of sanctions that have been placed on the country’s output, leading West Texas Intermediate for March delivery to advance 2.13 percent to US$79.72.
It was up 8.6 percent from the previous week’s US$73.39.
Photo: Reuters
Brent crude, the international benchmark, for March delivery rose 2.24 percent to US$86.39, gaining 8.1 percent from the previous week’s US$79.94.
This week’s rally also got a boost from Saudi Arabia’s decision to sell barrels at higher prices to Asian countries amid stronger demand from China, as well as supply disruptions in Turkey, Norway and Kazakhstan.
Russian Deputy Prime Minister Alexander Novak said the country’s production cut is voluntary and a response to Western price caps.
Still, analysts have been predicting some output losses following the recent sanctions announcements, TD Securities commodity strategy director Daniel Ghali said.
“It is possible that Russia is portraying these output losses as a decision to cut their oil production when they might have occurred regardless,” Ghali said.
Despite the cuts, Russia’s partners in the OPEC+ coalition signaled that they would not boost output to fill in for the reductions.
“Crude prices reacted positively to the news, considering that so far Russian oil production has been relatively resilient,” UBS Group AG analyst Giovanni Staunovo said.
“The move ... aims to improve oil revenues by narrowing the discount of Russian oil to Brent,” he said.
An EU-wide ban on Russian oil products — such as diesel, gasoline and jet fuel — came into effect on Sunday last week, alongside a G7 price cap on the same items.
That expanded on the EU embargo on seaborne oil deliveries introduced two months ago — when it also established with G7 partners a US$60 per barrel cap for Russian exports.
Oil, already bolstered by the reopening of top consumer China after lengthy COVID-19 pandemic restrictions, rebounded further on the news from Novak, who in charge of Moscow’s energy policy.
Russia is part of a 23-nation alliance with the OPEC crude cartel that already agreed in October to reduce output by 2 million barrels per day until the end of this year.
Additional reporting by staff reporter, with AFP
STATE SUBSIDIES: The talks over a factory in Dresden have a top end on par with what Japan is offering TSMC and outdo a cap other firms are being offered in Europe Taiwan Semiconductor Manufacturing Co (TSMC, 台積電), the world’s biggest contract chipmaker, is in talks to receive German government subsidies for as much as 50 percent of the costs to build a new semiconductor fab in the country, people familiar with the matter said. The government is in ongoing negotiations with TSMC, as well as its partners on the project — Bosch Ltd, NXP Semiconductors NV and Infineon Technologies AG — the people said, asking not to be identified because the deliberations are private. No final decisions have been made and the final subsidy amount could still change. Any state aid must also
South Korea would avoid capitalizing on China’s ban on a US chipmaker, seeing the move by Beijing as an attempt to drive a wedge between Seoul and Washington, a person familiar with the situation said. The South Korean government would not encourage its memorychip firms to grab market share in China lost by Micron Technology Inc, which has been barred for use in critical industries by Beijing on national security grounds, the person said. China is the biggest market for South Korea semiconductor firms Samsung Electronics Co and SK Hynix Inc and home to some of their factories. Their operations in China
GEOPOLITICAL RISKS: The company has a deep collaboration with TSMC, but it is also open to working with Samsung Electronics Co and Intel Corp, Nvidia’s CEO said Nvidia Corp, the world’s biggest artificial intelligence (AI) GPU supplier, yesterday said that it is diversifying its supply chain partners in order to enhance supply chain resilience amid geopolitical tensions. “All of our supply chain is designed for maximum diversity and redundancy so that we can have resilience. Our company is very big and so we have a lot of customers depending on us. And so our supply chain resilience is very important to us. We manufacture in as many places as we can,” Nvidia founder and chief executive officer Jensen Huang (黃仁勳) said in response to a reporter’s question in
BIG MARKET: As growth in the number of devices and data traffic accelerates, it will not be possible to send everything to the cloud, a Qualcomm executive said Qualcomm Inc is betting the future of artificial intelligence (AI) will require more computing power than what the cloud alone can provide. The world’s largest maker of smartphone processors is transitioning from a communications company into an “intelligent edge computing” firm, Qualcomm senior vice president Alex Katouzian said. The edge in question is the mobile device that a user taps to access a network or service, and Katouzian used his time headlining one of the major keynote events at the Computex show in Taipei to make the case for how big a market that would be. The US company’s chips help smartphones harness
RSS