- Oil Benchmarks Brent crude reached an all-time high at $86.68 a barrel and WTI at $79.76 on Friday.
- There is constant talk of Western countries hedging Russian crude at between $65 and $70 a barrel.
- China reported a record number of COVID-19 infections on Friday, raising fears of a demand slump.
Oil prices rose on Friday on low trading volumes, even as Western countries continued discussions over a Russian crude price cap and China enacted further lockdown measures.
Brent crude was up 1.7% at $86.68 a barrel at last check, while WTI crude was up 2.3% to $79.76 a barrel.
Those benchmarks are still on track to end in the red this week as Russian oil price cap talks continue.
Diplomats from the G7 group of countries and the European Union are discussing a maximum price for Russian oil between $65 and $70 a barrel as part of a broader sanctions package. Russian Urals oil fell 5.3% to $67 a barrel on Friday.
“Price cap negotiations will continue, but it looks like it won’t be as strict as previously thought, making it useless to make this cap,” said Craig Erlam, market analyst at OANDA.
“Oil prices have fallen again this week because the threat to Russian production from, say, the $70 limit is minimal, as oil is already selling around those levels.”
Erlam said the further Covid-19 lockdown in China could also have an impact on crude oil prices. The world’s largest oil importer hit a new daily record on Friday, with Beijing locking down cities across the country. This move can reduce the demand for oil.
“In China’s major cities, there are lockdowns in all but record in all major Chinese cities in an effort to get hold of the names, which will again weigh heavily on economic activity and hence demand,” Erlam said.
“Now the question is how long they will last, but investor enthusiasm for the easing of Covid restrictions was clearly a bit premature.”
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