BENCHMARK oil prices increased early this week as a G7 and European Union cap on the price of Russian crude came into force and the Opec+ oil group confirmed its plan to keep production levels down. An EU ban on seaborn Russian oil imports also came into effect on Monday. The cap means that only Russian oil bought for less than $60 per barrel can be shipped using EU tankers, insurance companies and credit institutions. Brent crude spiked initially to $86 per barrel at first, partly on concerns that Russia would carry out its threat to curb the supply of crude to supporters of the price cap and despite an Opec+ oil decision to maintain production cuts. But benchmark prices retreated as oil markets reflected on the Opec+ group's reticence about squeezing output further. Chinese moves to ease Covid lockdown policies after a wave of protests did not dispel the bearish mood about lower global growth and higher inflation. The cap will also make it easier for traders in China and India to drive tougher bargains with Russian exporters of Urals crude, adding to the downward pressure. Earlier discussions about the price cap led to some disagreement among its backers. Poland wanted a lower ceiling, while others, notably the US, were wary of hitting Russia too hard with measures that could hurt global supply.
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