Oil prices rose more than $2 a barrel on Friday after Moscow said it may cut crude output in response to a G7 price cap on Russian exports, sending the market heading for a second week of gains.
Brent rose 3.6% to $83.92 a barrel, while US West Texas Intermediate (WTI) crude gained 2.7% to $79.56 a barrel. Both markers posted their biggest weekly gains since October.
The Mexican export mix advanced 3.29% to 68.81 dollars per barrel and gained 7.75% in the week.
Russia may cut its oil production by 5-7% in early 2023 in response to price caps, the RIA news agency reported on Friday, citing Deputy Prime Minister Alexander Novak.
Russia’s Baltic oil exports could fall 20% in December from the previous month, after the European Union and G7 countries imposed sanctions and a price cap on Russian crude from December 5, according to traders and Reuters calculations.
“The possible cut from Russia could be giving bulls more fuel,” said Eli Tesfaye, senior market strategist at RJO Futures. “If global demand continues at its current pace, that cut could have a significant impact and we could end up in the $80 range.”
The demand for transport fuels increases during the Christmas and New Year holidays. However, a massive winter storm swept across a wide swath of the United States, forcing thousands of flights to be cancelled.
Icy cold and hurricane-force winds knocked out power and reduced power production across the United States on Friday, sending heating and electricity prices soaring as people prepared for holiday celebrations.
Winter storm Elliott brought freezing temperatures and extreme weather warnings to nearly two-thirds of the United States, with cold and snow in some areas lingering through the holiday season.
Refining capacity along the US coast in the Gulf of Mexico has been cut by about 1.5 million barrels a day due to freezing temperatures. Production losses are not expected to be long-lasting, but they have driven up fuel prices.
TotalEnergies, Motiva Enterprises and Marathon Petroleum facilities, located outside of Houston, closed. The cold also disrupted Exxon Mobil, LyondellBasell and Valero Energy plants in Texas, which produce gasoline, diesel and jet fuel.
Freezes – in which ice crystals stop oil and gas production – this week reduced production from North Dakota’s oil fields by between 300,000 and 350,000 barrels a day, or a third of normal.
US heating diesel futures gained 4.3%, while natural gas futures rose 2.5%.
The price of oil in the international market has had great ups and downs in 2022 as a result of the war between Russia and Ukraine that began at the beginning of the year.
