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Oil Updates — Oil settled up; G7 considering ways of capping Russian oil price; US drillers add oil and gas rigs for a record 23 months

RIYADH: Oil prices settled up by more than $3 a barrel on Friday, supported by tight supply, but they notched their second weekly decline on concern that rising interest rates could push the world economy into recession.

Brent crude settled up $3.07, or 2.8 percent, at $113.12 a barrel by 12:10 p.m. EDT. US West Texas Intermediate crude settled up $3.35, or 3.2 percent, at $107.62.

No government guidance on pricing policy: Incoming Petrobras CEO 

The incoming CEO of Brazil’s state-run oil company Petrobras told a corporate committee he has not received any guidance from the government on changing the firm’s fuel pricing policy, a document showed on Saturday.

Caio Mario Paes de Andrade, a former economy ministry official appointed by President Jair Bolsonaro to run Petrobras, was approved by the eligibility committee on Friday, a key step for him to take the reins of the company.

The minutes of the meeting, published by Petrobras on Saturday, showed the committee had asked Andrade about the company’s pricing policy, a topic that helped bring down three CEOs during Bolsonaro’s tenure as price hikes created tensions with the far-right leader.

“I have no specific or general guidance from the controlling shareholder or any other shareholder in the sense of changing the company’s pricing policy,” Andrade said.

He is on the verge of taking over as CEO a month after he was named by Bolsonaro, awaiting a board vote on June 27.

G7 considering ways of capping Russian oil price

Leaders of the Group of Seven rich democracies are having “very constructive” discussions on a possible cap on Russian oil imports, a German government official said on Saturday shortly before the start of the annual three-day G7 summit.

The proposal is part of broader G7 discussions on how to further crank up the pressure on the Kremlin over its invasion of Ukraine without stoking global inflationary pressures.

The Ukraine war, energy and food shortages and the darkening global economic outlook are expected to dominate the agenda of the summit that is taking place this year in Schloss Elmau, an alpine castle resort in southern Germany.

The US, Canada and Britain have already banned imports of Russian oil while EU leaders have agreed on an embargo that will take full effect by the end-2022 as part of sanctions on the Kremlin over its invasion of Ukraine.

With energy prices soaring though, the West fears such embargoes will not actually put a dent in Russia’s war chest as the country earns more from exports even as volumes fall.

A price cap could solve that dilemma, while also avoiding further restricting oil supply and fueling inflation, officials say, but for it to work, it requires buy-in from heavy importers like India and China.

“We are on a good path to reach an agreement,” the official said.

The official said the G7 was also discussing the need to combine ambitious climate goals with the need for some countries to explore new gas fields as Europe rushed to wean itself off Russian gas imports.

US drillers add oil and gas rigs for a record 23 months

US energy firms this week added oil and natural gas rigs for a second week in a row, in a record 23-month streak of increases, as high crude prices and prodding by the government prompted drillers to return to the well pad.

The oil and gas rig count, an early indicator of future output, rose 13 to 753 in the week to June 24, its highest since March 2020, energy services firm Baker Hughes Co. said in its closely followed report on Friday.

Baker Hughes said that puts the total rig count up 283, or 60 percent, over this time last year.

US oil rigs rose 10 to 594 this week, their highest since March 2020, while gas rigs gained three to 157, their highest since September 2019.

That put the overall oil and gas rig count up for a record 23 months in a row, gaining 26 in June. It also put the count up for seven quarters in a row, the longest streak of gains since 2011.

The oil rig count was up for a record 22 months in a row, rising 20 in June. It also increased for the seventh quarter, the most quarters since 2012.

The gas rig count rose by six in June, rising for a 10th month in a row, tying the record set in May 2010. It also put the gas count up for seven quarters in a row, matching the record set in 2004.

(With inputs from Reuters)