USOil Supported as G7 Leaders Explore Price Cap on Russian Oil
USOIL Analysis
The leaders of the seven advanced economies known as G7, will be concluding their three-day gathering today. The war in Ukraine has been a key focus, pledging their support for the defending country for "as long as it takes". [1]
Furthermore, the group looks to impose further sanctions against Russia, declaring its commitment to deprive the federation from revenue sources that fund the ongoing war. In this vein, they intend to ban Gold imports from the country, as per the US President's tweet from over the weekend. [2]
Beyond that, G7 leaders are also reportedly looking to put a limit on the price of oil they still import from Russia and US National Security Advisor Jake Sullivan was asked about that yesterday. He replied that there is "consensus emerging" that a price cap is "a serious method" for achieving the goal of denying revenue to Russia, while ensuring the stability of the energy market.
Meanwhile, OPEC member Libya, warned on potential halt in oil exports over the next couple of days, casting more doubts over the group's plan to increase output. The Chairman of the National Oil Company said yesterday that it is "considering the declaration of the state of force majeure within the next 72 hours unless production and shipping is resumed at the oil ports in the Gulf of Sirte". [4]
These developments are supportive for USOil, which stays in profits, after the two-day relief rally. It has moved above the daily Ichimoku Cloud and now tries to surpass the EMA200. Successful effort would bring 123.69 back into the spotlight, but it may be early for such moves.
Despite the recent recovery and the broader supportive outlook, the recent decline puts USOil in precarious position, which may struggle to avoid a losing month. At this stage, there is risk of a return below 106.00 that would expose it to the May lows (98.21), but a catalyst would be required for sustained weakness and the downside looks well protected.
Nikos Tzabouras
Senior Market Specialist
Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.
With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.
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