WTI Oil Price Prediction – Traders React To Discussions Of Price Cap For Russian Oil

Key Insights

• G7 countries discussed a potential price cap for Russian oil, but no decision has been made so far. 
• Traders focus on potential supply disruptions, but they are also worried about a potential recession in the second half of the year. 
• Currently, oil looks stuck in the $100 – $120 range. 

Traders Evaluate A Potential Price Cap On Russian Oil

WTI oil is gaining some ground in volatile trading as traders try to guess whether G7 countries will be able to come up with new restrictions on Russian oil that could push it out of the markets.

At this point, G7 countries have reached an agreement on banning Russian gold, but there is no deal on oil. Rumors suggest that a price cap on Russian oil is discussed.

However, there are many practical problems associated with such a decision. For example, G7 countries may ban marine insurance to those who buy Russian oil at a price above the specified amount. However, Russian oil is not the most expensive oil in the market as it already sells at a discount. Also, G7 will have to change sanctions on Russian oil that have been already imposed.

In addition, it is not clear whether Russia will continue to supply oil to EU if such a price cap is imposed. EU has already planned to eliminate most purchases of Russian oil by the end of this year, but a cut in supplies in summer may have big consequences for the European economy, which is already struggling due to high natural gas prices.

WTI Oil Looks Stuck In The $100 – $120 Range

High demand during the summer season and uncertainty regarding future supplies from Russia continue to serve as bullish catalysts for oil markets.

At the same time, traders should also focus on economic data, as a potential recession can hurt demand for oil and push prices below the $100 level.

At this point, it looks that oil is stuck in a new $100 – $120 range. Supply worries support oil prices when they move closer to the $100 level, while recession fears lead to active selling near the $120 level.

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