Oil prices are declining after a sharp rise last week

At the beginning of the new trading week, oil prices are falling after a significant increase last Friday, when quotations jumped from the level of $84.15 per barrel to $86.80 on the news of Russia's intention to reduce production.

The current price of Brent oil on Monday is $85.50 per barrel. North American WTI oil has similar dynamics: it is trading near the level of $78.90 per barrel after rising to $80.20 last week. In total, over the past week, Brent has risen by 8.1%, WTI – by 8.6%.

The oil market was supported on Friday by information that in March Russia intends to reduce oil production by 500 thousand b/d. Analysts note that such a decision was the first serious signal that Western sanctions imposed against Russia are having an impact on its production.

Economists believe that OPEC+ is unlikely to increase oil production in response to Russia's actions. It is noted that currently only Saudi Arabia and the UAE have spare capacity to increase production.

It is also worth noting that the probability of a decrease in Russian production by 700-900 thousand barrels in 2023 is already included in prices, so the impact of this factor on market dynamics will be limited. Analysts note that the main factor that can lead to the exit of prices from the current range is the dynamics of Chinese demand.