By David Ho
Investing.com – Oil was up on Tuesday morning in Asia amid tight supplies. But leaders of the Group of Seven (G7) nations vowed to add pressure on Russia while lowering energy prices.
Brent oil futures rose 1.21% to $112.32 by 11:13 PM ET (0313 GMT) and crude oil WTI futures rose 1.20% to $110.89. Oil prices stayed above $110 a barrel as crude and oil product supplies remained tight after the West posed sanctions on Russian oil.
The (G7) has vowed to stand with Ukraine "for as long as it takes." A proposal to cap the price of Russian oil is one of the new sanctions on Moscow's finances.
"I think if they were to implement a price cap on sale and purchase of Russian oil, it's difficult for me to imagine how this is going to be implemented, especially when China and India have become Russia's biggest customers," said Houston-based oil consultant Andrew Lipow.
Commonwealth Bank of Australia analyst Vivek Dhar had doubts about the move. He noted that there was "nothing stopping Russia from banning oil and refined product exports to G7 economies in response to a price cap, exacerbating shortage conditions in global oil and refined product markets."
A French presidency official suggested the international community should explore all options to alleviate tight energy supplies, including talks with producing nations like Iran and Venezuela. Both OPEC members' oil exports have been curbed by U.S. sanctions.
Furthermore, interest rate hikes in key economies strengthened the dollar and fanned fears of a global recession.
Recession fears and interest rate hike expectations have caused volatility and risk aversion in the futures markets. Some energy investors have pared back, while spot crude prices have remained strong on high demand and a supply crunch.
For now, pressing supply worries outweigh growth concerns.
Members of the Organization of the Petroleum Exporting Countries and their allies including Russia, known as OPEC+, are likely to stick to a plan for accelerated oil output increases in August when they meet on Thursday, sources said.
The producer group also cut its projected 2022 oil market surplus to 1 million barrels per day (bpd), down from 1.4 million bpd previously, a report seen by Reuters showed.
Libya might also halt exports in the Gulf of Sirte area within 72 hours amid unrest that has restricted production.
Adding to supply woes, Ecuador might suspend oil production completely within 48 hours amid anti-government protests that have seen at least six people die.
Traders are also waiting for the U.S. government oil inventory and other data to be published after it was not released last week due to server issues.
U.S. crude oil, distillate, and gasoline inventories likely fell last week, a preliminary Reuters poll showed on Monday.