USOil Supported as G7 Leaders Explore Price Cap on Russian Oil

  • USOil
    (${instrument.percentChange}%)

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. [3]

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.

References

1

Retrieved 28 Jun 2022 https://www.g7germany.de/resource/blob/974430/2057196/4628490eda0863e429c30136ec180feb/2022-06-27-g7-erklaerung-ukraine-en-data.pdf

2

Retrieved 28 Jun 2022 https://twitter.com/POTUS/status/1540945453998436353

3

Retrieved 28 Jun 2022 https://www.whitehouse.gov/briefing-room/press-briefings/2022/06/27/on-the-record-press-gaggle-by-national-security-advisor-jake-sullivan/

4

Retrieved 08 Aug 2022 https://noc.ly/index.php/en/new-4/8211-noc-as-the-closures-continue,-we-are-considering-declaring-a-state-of-force-majeure-in-the-gulf-of-sirte-region

Disclosure

Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.

Past Performance: Past Performance is not an indicator of future results.

Spreads Widget: When static spreads are displayed, the figures reflect a time-stamped snapshot as of when the market closes. Spreads are variable and are subject to delay. Single Share prices are subject to a 15 minute delay. The spread figures are for informational purposes only. FXCM is not liable for errors, omissions or delays, or for actions relying on this information.

${getInstrumentData.name} / ${getInstrumentData.ticker} /

Exchange: ${getInstrumentData.exchange}

${getInstrumentData.bid} ${getInstrumentData.divCcy} ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%) ${getInstrumentData.priceChange} (${getInstrumentData.percentChange}%)

${getInstrumentData.oneYearLow} 52/wk Range ${getInstrumentData.oneYearHigh}