On Friday, G7 decided to cap the price of Russian oil at $60/ bbl. this was finalised after long negotiations among the European countries. Then on Sunday OPEC+ met virtually and decided to keep the current production cuts till the next meeting on February 1st.
During the same weekend, China which is the largest oil buyer in the market decided to loosen some restrictions related to Covid in most of the cities impacted. And to add to the list from today European countries stopped importing oil from Russia.
All these factors have taken place in a short span of four days but the impact of these fundamental changes will impact the oil market for a long. That is why 2023 might be more volatile for the oil market than 2020-2022 though it was one of the most volatile periods in decades.
There is another set of restrictions that will be effective from 5th February and it is related to the European ban on petroleum products from Russia along with a price cap on the same.
That’s why to think that worst is behind in terms of interest rates, inflation and oil prices will be an over-optimistic thought. Cause when the premiums add to next year's oil prices due to all these fundamental changes the market might have changed for a long putting an upside to the inflation and interest rates estimates.