Oil prices fell more than four percent today as the G7 curbed Russian oil prices and after US fuel inventories rose more than expected. A barrel of Brent oil for delivery in January fell by $3.47 and now costs $84.89, and a barrel of crude oil in the US fell to $77.63.
Fuel inventories in the US increased by 3.1 million barrels, according to data from the US Energy Information Administration. Analysts had expected an increase in inventories of only 383,000 barrels. Prices were additionally affected by information that the Group of Seven members are considering capping the price of Russian oil at $65 to $70 per barrel, a European official said.
Officials said Washington does not expect Russia to retaliate.
"We have no reason to expect that they would do that because, ultimately, it's not in their interest," the Treasury official said. As the EU and the United States have put in place bans on Russian energy imports, big buyers including China and India have scooped up Russian oil at discounted prices.
"Any action they take to drive up prices would have an impact on their new customers, customers like India and China who they (Russia) want to remain oil customers going forward," the U.S. official said. There is no expectation of the coalition making adjustments to the price cap level at the beginning of the week, the end of the month or any other periodic period.
"Our goal is to revisit this on a regular basis, which from my standpoint, will look hopefully more like quarterly or even semi-annually because what we want to do is provide certainty to the marketplace." That level is currently higher than the price at which Russian oil is sold on the market.
A barrel of crude Ural oil currently costs between 62 and 63 dollars. "On the bright side, the OECD does not envisage a global recession and maybe this helped oil prices and stocks strengthen further," said analyst Tamas Varga at PVM Oil Associates.