Oil sinks as EU discusses a softer Russian price cap, Natalia Kniazhevich joins Paul Allan and Shery Ahn on "Bloomberg Daybreak: Australia" to discuss.

Vienna

Russia has been hit by global sanctions following President Vladimir Putin's decision to invade Ukraine.

Russian Sanctions

Oil sinks as EU considers soft price cap

Natalia. So we saw the talks finishing without an agreement were not talking about a price cap of what's 65 to $70 a barrel. But at the same time we had u.s. top half. So it looks like countries can't agree on that level of the price that we know that the European Union's executive arm proposal level at $65 a barrel countries like Poland or other Baltic Nations. They pushed back and they said this is probably too generous for Russia are the countries like Greece and Malta so they don't want to go far below, $70 a barrel. So talks will continue in the whole idea. Behind this price cap was to impose a level at, which washer won't be able to get any substantial Revenue. But at the same time, flows will continue even at $65 a barrel. This is way above Russia's cost of production and they scalp long. It's a likely to have a significant impact because Russia is already selling crude at a very sick. Discount. Yeah, so if that price Kappa is implemented, you say it's not really going to impact crude prices that much. What's the point? so, We don't know yet says the market will respond because as sometimes we asked our gas, some Bloomberg television, like do a government officials, talked the traitors because flows will continue. And now the whole idea is that this is more a demand story rather than Supply. So if we assume that this price cap will be a 65 to $70. A barrel. Float will continue to demand is still weak. Look at China, the country consumes to 1 million, barrels a day, less than it did. Last year. Did European demand is also with the economy is basically already in a recession here in the US demand is also below what the market participant has expected. So again, this isn't the Man story and look at what age did recently. They decided to increase production by $2000000. Add a Citi, Global head of Commodities and words spoken Bloomberg television today and he said data that they track shows that flows from open class countries is now. 25 million barrels a day lower. This is much more than the market has expected and never the last prices go down. This shows, how significant demand story is now. Opaque, meaning could really be the wild card for Marcus. So what's the positioning like right now? So the position is really better. Should we look at open interest for WTI since 2014? This is really low. We know that WTI Futures flipped again into contango. This is the second time we see that this month and know if you look at technical analysis now Whi deep below 50 100 and 200 moving averages. This is a very bearish sentiment and probably the only ones I seen that or Pet Plus can do is just to reduce faster than than the man falls.

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Russian Sanctions