- Oil extends losses ahead of a ban on Russian fuels and the Fed meeting
- March ’23 WTI lost $1.64 this morning to trade around $78/Bbl
- The Fed is expected to hike interest rates by 25 bp this week (Jan 31 – Feb 1)
- The EU and G7 are in the planning phases for a price cap on Russian refined oil products that will go into effect on February 5, along with sanctions
- OPEC+ is set to meet on Feb 1 to review crude production levels, and sources from the bloc expect the existing output policy to remain unchanged (Reuters)
- Travel in China is surging after the Lunar New Year, which led to an increase in jet fuel and gasoline consumption as the country reopens (BBG)
- China’s Ministry of Culture and Tourism reports that over 300 million trips were made over the holiday, nearly 90% of pre-pandemic levels
- Domestic trips also rose by 80% year-over-year; meanwhile, retail gasoline sales were up 20% from last year
- China’s demand is important as it accounts for over half of the EIA's projected global demand growth of 1 MMBbl/d for 2023
- Israel’s attack on an Iranian defense compound has escalated tensions in the middle east (WSJ, BBG)
- An escalation in the region has the potential to disrupt crude flow as nearly 20 MMBbl/d of oil flows through the strait of Homuz
- US efforts to revive a nuclear containment deal with Iran have stalled, but the administration is reportedly considering alternative options
- "The president has always said, while he would prefer a diplomatic, peaceful way to achieve an outcome of Iran not having a nuclear weapon, he isn't going to take other options off the table," said NSC’s Strategic Communications Coordinator John Kirby