Basra's heavy crude gains nearly 3% as Russia says it will lower output, China's demand recovers

Shafaq News/ Crude oil prices settled higher Friday, as Moscow said it may cut oil production to offset price caps on Russian crude imposed by the G7 nations and the European Union.

On the New York Mercantile Exchange crude futures settled 2.7% higher at $79.56 a barrel, while on London's Intercontinental Exchange, Brent added 3.6% to settle at $83.92 a barrel.

Despite a $0.45-loss on the final day, Basra's heavy crude posted a weekly gain of 2.91%, or $2.03, settling at $71.79.

Russia may cut its oil output by 500,000-700,000 barrels a day in early 2023, Deputy Prime Minister Alexander Novak reportedly said in a media interview on Friday.

Novak said Moscow would lean toward cutting production rather than selling crude in line with the price cap.

The Group of Seven (G7) nations and the European Union agreed earlier this month to cap the price of Russian seaborne crude oil at $60 per barrel. The price cap aims to curb Russia’s income from oil sales – primarily to hinder its ability to fund its war against Ukraine – and keep a lid on global oil prices.

But many argue the price cap hasn’t dented Russia’s income from oil exports, which have found willing buyers from China, India, and Turkey.

Possible production cuts from Moscow stoked fears of a potential supply shortage as demand looks set to receive a boost from the China reopening.

Oil demand from China, the world’s top oil importer, could reach 15.7 million barrels per day in 2023, around 700,000 barrels higher than in 2022, S&P estimated in its most recent forecast.