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Oil prices rose by more than $2 per barrel on Friday after Moscow said it could cut crude output in response to the G7 price cap on Russian exports, putting the market on track for a second week of gains.

Brent crude was up by $2.72, or 3.4 per cent, to $83.70 a barrel at 1:24 p.m. EST (1824 GMT), while U.S. West Texas Intermediate (WTI) crude was at $79.77 a barrel, up $2.28, or 2.9 per cent.

Russia may cut oil output by 5 per cent to 7 per cent in early 2023 as it responds to price caps, the RIA news agency cited Deputy Prime Minister Alexander Novak as saying on Friday.

Russia’s Baltic oil exports could fall by 20 per cent in December from the previous month after the European Union and G7 nations imposed sanctions and a price cap on Russian crude from Dec. 5, according to traders and Reuters calculations.

“The potential cut from Russia could be giving the bulls more fuel,” said Eli Tesfaye, senior market strategist at RJO Futures. “If global demand continues at current pace, that cut could have a significant impact and we may stay in the $80s range.”

Demand for transportation fuels surges around the Christmas and New Year’s holidays. However, a massive winter storm was cascading across a broad swath of the United States, forcing thousands of flight cancellations.

The storm could also upend motorists’ holiday travel plans, although Tesfaye said any storm-related disruptions are expected to be temporary. Some of the largest U.S. refineries were shut down due to extreme cold weather on Friday, putting around 1 million barrels per day of refining capacity offline.

The supply disruptions sent U.S. gasoline and ultra-low-sulfur diesel futures 5 per cent higher.

Trading volumes are lighter because of the upcoming holidays, making the market more susceptible to exaggerated price swings.

“When the real volume returns after the holidays, we will see if and how long (WTI crude) stays over $80 per barrel,” Tesfaye said.

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