The EU’s ban on imports of Russian petroleum products will come into force on Sunday, which could raise EU fuel prices and weigh on Russia’s product exports. However, we suspect Russia will offer steep discounts to non-EU buyers, which will help to minimise disruption. On top of this, the EU and G7 price cap on Russian petroleum products should come into force on Sunday. The aim of the price cap on products is like the one already in place for crude: to allow Western businesses to facilitate the trade in Russian products priced below a certain level, depriving Russia of revenues but limiting the hit to global supply.
Next week will be quiet in terms of macro data. Investors will, however, be paying close attention to Federal Reserve Chair Powell’s comments at a Q&A session in Washington on Tuesday. In particular, what he thinks the strong jobs report released today means for the inflation outlook. If investors do pick up on hawkish sentiment, we could see interest rate expectations rise and commodity prices fall.
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