On Track For Weekly Loss On Demand Worry; G7 FMs Due To Discuss Price-Capping Mechanism

WTI and Brent are ~$1.60 firmer apiece but remain firmly on track to end the week sharply lower, more than unwinding the previous week’s modest gain.

• To recap, both benchmarks hit fresh multi-week lows on Thursday amidst rising demand-related worry stemming from a range of soft economic activity data prints, elevated worry re: central bank hawkishness, and a complete lockdown of the Chinese city of Chengdu (pop. ~21mn).
• A note that Chinese authorities had already been raising COVID-related curbs (ranging from minor restrictions to full lockdowns) on tens of millions of citizens across the country, with Chengdu having previously closed tourist sites and entertainment venues last Tuesday (Aug 23).
• The latest Iranian response to the EU’s draft for a U.S.-Iran nuclear deal was described as “unconstructive” by U.S. officials, unwinding recent optimism for an agreement (and a return of Iranian oil to crude markets).
• Looking ahead, G7 finance ministers are due to meet later on Friday to work out potential price caps on Russian crude, although Russian Deputy PM Novak stated on Thursday that Russia would not supply oil and oil products to any country adopting the measure.
• Elsewhere, a BBG survey has pointed to median expectations for OPEC+ to hold output targets steady at the group’s next meeting on Sep 5.