Oil Prices Stabilize as Shanghai's Lockdown is Eased and Russian Output is Reduced

Shanghai said more than 7,000 residential units had been designated as lower-risk locations after a 14-day period with no new illnesses. Districts have begun stating which compounds are available for public inspection.

Meanwhile, the Organization of the Petroleum Exporting Countries (OPEC) cautioned that it would be hard to replace the 7 million barrels per day (bpd) of Russian oil and other liquids exports that would be lost as a result of sanctions or voluntary measures.

On Monday, Russian oil and gas condensate output dipped below 10 million barrels per day (bpd), the lowest level since July 2020, two individuals familiar with the data said on Tuesday, as trading was impeded by sanctions and logistical restrictions.

According to sources, Russia's average oil production declined more than 6% to 10.32 million barrels per day (bpd) on April 1-11, from 11.01 million in March.

Although the European Union has not yet imposed an embargo on Russian oil, certain foreign ministers have indicated that the possibility is being considered.

"The oil market is susceptible to a huge shock if Russia's energy sector is sanctioned, and that risk remains," stated Edward Moya, a senior market analyst at OANDA.

OPEC dropped its prediction for Russian liquids output in 2022 by 530,000 barrels per day, but maintained its forecast for global oil demand growth, citing the effect of Russia's invasion of Ukraine, rising crude prices, and the recurrence of the epidemic in China.

Indian Oil Corporation (IOC), which previously purchased Russian Urals in bids, has withdrawn the grade from its next crude offer. On Monday, US Vice President Joe Biden informed Indian Prime Minister Narendra Modi that purchasing more oil from Russia was not in India's best interests.

Members of the International Energy Agency (IEA) intend to release 240 million barrels over the next six months beginning in May in an attempt to stabilize the market.

While the release will alleviate acute shortages, economists cautioned that it would not address the underlying imbalance, and supplies will need to be replenished.

According to a preliminary Reuters poll, 8849|US crude oil inventories are estimated to have increased by 1.4 million barrels in the week ended April 8, after three consecutive weeks of declines.

The survey was taken ahead of Tuesday's American Petroleum Institute report, which is scheduled to release at 4:30 p.m. EDT (2030 GMT).