It has been only a week since the sanctions applied on Russian petroleum products came into effect. And this already has resulted in Russia announcing a 500,000 bbl/day cut from March. This is per its statement earlier that it would not supply to price-cap complying nations.
Another announcement it made was that it would be making the local crude oil( Ural Oil ) synched with Brent Oil prices with a fixed discount of $20/ bbl to keep the tax revenues stable. These announcers resulted in crude oil prices rising by 2.67% by Friday's close. Though the current prices are still below $100/bbl there are upside risks to this price.
First would be any escalation of the Russia-Ukraine conflict as the first-anniversary approaches by this month's end. Second is the reopening of China, the data till now points towards a larger recovery in services especially travel. This would increase the fuel requirement and might lead to an imbalance in the oil market from the third quarter.
There are other risks as well that might lead to a sudden spike in crude oil prices. This would result in even a spike in the price of Russian oil which would mean it breaches the set price cap. Though major nations such as China and India are not following their transportation of these products would become extremely difficult as the majority of traders and insurance would not provide services as which would result in the breach of sanctions.
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