Little Changed In Asia; Recession Worry Lingers

WTI and Brent sit ~$0.10 weaker apiece at typing, paring earlier losses, and operating around the upper end of their respective ranges on Friday. Both benchmarks have risen from session lows as earlier worry re: a recession in the U.S. and an ongoing COVID outbreak in China’s east has moderated for now, mixing with lingering worry re: tight global crude supplies.

• Brent’s prompt spread (~$3.75 at typing) continues to sit at elevated levels despite recent downticks in crude benchmarks, pointing to expectations for near-term tightness in crude markets.
• Japanese PM Kishida offered details re: the G7’s proposed price caps on Russian crude - that they may be fixed at approx. half of its current purchase price. While consensus re: the wider impact of price caps has yet to be reached, some are increasingly pointing to the potential for a surge in oil prices due to issues surrounding the imposition of the measure.
• A previously-flagged worker strike in Norway’s O&G sector is estimated to reduce crude exports by ~130K bpd (~6.8% of national output), with little progress reported in ongoing wage talks.
• Elsewhere, Libyan crude production has declined, now averaging ~365K to ~409K bpd, down from >600K bpd in June, and less than half of the ‘21 average of ~1.1mn bpd. Several critical facilities (such as the 300K bpd El Sharara oilfield) remain under force majeure amidst political unrest.
• On the other hand, Ecuadorian crude output is expected to rise this week to ~90% of levels witnessed before recent political unrest, possibly representing ~200K bpd in recovered oil production.