International oil prices continue to be under pressure, and the G7 may only sanction Russia's price ceiling

On Thursday (November 24), international oil prices extended their overnight decline, as the proposed upper range of Russian oil prices proposed by the G7 countries was higher than the current trading level, easing market concerns
about potential supply tightness.
EU governments have yet to agree on the price range, and they will resume negotiations
in the last two days.

At 16:41 Beijing time, NYMEX crude oil futures sank 0.
21% to $77.
78 per barrel; ICE Brent crude futures fell 0.
18% to $84.
99 a barrel
.

The two cities tumbled nearly 4 percent overnight as the G7 considered capping the price of Russian seaborne oil at $65 to $70 a barrel
, according to a European official.
However, EU governments have yet to agree on such price ranges, and they will resume negotiations
on price caps on Thursday or Friday (November 25).

Since the G7 countries plan to set a price cap on Russian oil higher than the current market level, this may entice Russia to continue selling oil, thereby reducing the risk of
supply shortages facing the global oil market.
The G7, along with the entire European Union and Australia, plans to impose a price cap
on Russian oil exported by sea on December 5.

Countries dispute
price caps.
Poland, Lithuania and Estonia believe that $65-70 per barrel will make Russia too profitable, since the cost of production is only about
$20 per barrel.
Countries with large shipping industries, such as Cyprus, Greece and Malta, have argued that the ceiling is too low and have demanded compensation for lost business or more time to adjust
.
If the shipment of Russian oil cargo is hindered, the latter will suffer great losses
.

Vivek Dhar, commodities analyst at Commonwealth Bank of Australia, said in a note that the range was higher than market expectations, reducing the risk of
global supply disruptions.
"If the EU agrees this week to cap oil prices at $65-70/b, we see a downward
revision to our oil price forecast of $95/b for the quarter.
"

Dhar added that the agency's fourth-quarter oil price forecast of $95/b is based on the assumption that EU sanctions and a cap on Russian oil prices will be enough to disrupt supply and heighten global growth concerns
.

Since the outbreak of the Russian-Ukrainian conflict in February, India has replaced countries that have imposed sanctions on Russian crude imports as the main buyer
of Russian crude oil.
Some Indian refineries pay a discount of about $25 to $35 per barrel for Russian Urals crude, the sources said
.
Urals crude oil is Russia's main export grade
.

This implies that shippers or insurance companies in countries that have imposed sanctions on Russia will be able to continue servicing Russian crude shipments without fear of sanctions
.
It also means that Russia does not need to honor the threat of supply cuts to buyers enforcing the price cap, because the market price is below the ceiling
anyway.

About 70%-85% of Russia's crude oil is exported
by tanker transport.
The idea of a price cap is to prohibit shipping, insurance and reinsurance companies from handling Russian crude cargoes globally unless their selling price does not exceed the cap
set by the G7 and its allies.

Since the world's major shipping and insurance companies are located in G7 countries, the price cap will make it difficult for Moscow to sell its oil
at higher prices.
At the same time, with production costs estimated at around $20 per barrel, the cap will still make it profitable for Russia to sell oil, thus preventing a shortage
of supply in the global market.

Chevron could soon get U.
S.
approval to expand operations in Venezuela and resume oil trading
once the Venezuelan government and its opposition resume political talks, four people familiar with the matter said Wednesday.

Both Venezuelan political parties and U.
S.
officials are pushing for talks
in Mexico City this weekend, people familiar with the matter said.
It would be the first such talks since October 2021 and could pave the way
for the easing of U.
S.
oil sanctions against the country.
Venezuela is a member
of the Organization of the Petroleum Exporting Countries (OPEC).

U.
S.
gasoline and distillate inventories both rose sharply last week as refiners ramped up production, easing concerns
about market nervousness, data released overnight by the U.
S.
Energy Information Administration (EIA).
Despite the sharp decline in crude oil inventories, refinery utilization rose 1 percentage point to 93.
9 percent of total capacity, with East Coast utilization hitting a record high
.

Andrew Lipow, president of Lipow Oil Associates in Houston, said: "The EIA data adds to the bearish sentiment
given the improved refinery utilization and the resulting increase in product inventories.
”