Higher In Asia

WTI is +$2.60 and Brent is +$2.30, operating a touch below session highs, but still comfortably above Thursday’s best levels. Lack of concrete progress in ongoing Russia-Ukraine ceasefire talks has mixed with elevated worry re: struggling Russian crude exports, countering recent demand-related fears surrounding China’s ongoing COVID-19 outbreak.

• To elaborate, BBG reports have pointed to traders expecting a decline in Russia’s benchmark Urals crude export volumes in the coming weeks, as the effect of western sanctions on Russia kicks in. Turning to China’s ongoing COVID-19 outbreak, earlier worry re: lockdowns impacting the country’s energy consumption has eased from extremes earlier in the week, as the authorities have emphasised efforts to “minimise” the economic cost of pandemic control measures, while partially lifting a lockdown on Shenzhen. As of Friday, freshly reported cases in China have continued to hold below Tuesday’s peak.
• Elsewhere, evidence of formal progress towards an Iranian nuclear deal has been scant, although developments positive to Iran-western relations have been observed just over the past week. To recap, Iran has ended the multi-year detainment of two British citizens, while a BBG source report has pointed to the IAEA (international nuclear watchdog) verifying that Iran has started on processes to render a third of its enriched uranium stockpile useless for weapons.
• Keeping within the Middle East, OPEC shows little sign of bowing to rising international pressure to increase production, seeing Saudi Crown Prince MBS agree with Japanese PM Kishida on Thursday to help “maintain balance” and “stabilise” global crude markets, with no mention of potential production increases. A note that UK PM Boris Johnson had earlier in the week failed to secure production increase guarantees in meetings with Saudi and UAE leaders as well.