Oil prices deepened their decline by about 2% during trading today, Friday, as Brent crude fell to less than 97 dollars, giving up the gains recorded in morning trading.
The black gold was trading in the green range with gains of nearly 2% in early trading; Due to fears of disruption to global supplies, as a result of trade sanctions in Russia, the largest exporter of crude and fuel, after its invasion of Ukraine.
Oil prices ended their trading with gains of about 2% at the end of trading yesterday, Thursday, after rising by about 9%, and the black gold crossed the barrier of $ 100 a barrel for the first time since late 2014.
On the other hand, investors are awaiting the release of the report of oil drilling rigs in the United States from Baker Hughes, later today.
Oil Prices Today
The price of West Texas Intermediate crude futures – for delivery in April – fell by 1.2%, to reach $ 91.69 a barrel, after it was trading near $ 95 in early trading.
The prices of Brent crude futures contracts – April 2022 delivery – fell by 1.9%, recording $97.20 a barrel, after it was above the $100 barrier in morning trading.
The start of the invasion in Ukraine, on Thursday, caused prices to rise above $ 100 a barrel for the first time since 2014, with Brent crude touching $ 105, before reducing the gains at the close of trading.
The massive Russian offensive by land, sea and air was the largest attack on a European country since World War II, driving tens of thousands of people to flee their homes.
Oil Market Conditions
“Asian buyers, obviously nervous at the weekend, piled into oil today, driving up prices again, aided by reports of explosions in Kiev,” said Jeffrey Haley, chief market analyst , referring to the Ukrainian capital.
He noted that the situation in Ukraine would help keep prices high, as well as the threat of disruption, real or imagined, coming in an environment of strong demand and globally constrained supply.
He added, “I think Brent crude will trade in the range of 90-110 dollars over the next few weeks,” Reuters reported.
In response to the invasion, US President Joe Biden hit Russia with a wave of sanctions on Thursday, measures that impede Russia’s ability to do business in major currencies as well as sanctions against banks and state-owned companies.
Britain, Japan, Canada, Australia and the European Union also revealed further sanctions on Moscow, including a move by Germany to halt the $11 billion Nord Stream pipeline from Russia.
Low Oil Stocks
However, a US official said Russia would not specifically target oil and gas flows with sanctions, as the country is the world’s second-largest crude producer and a major supplier of natural gas to Europe.
“Oil markets are particularly vulnerable to supply shocks given global oil inventories have fallen to their lowest levels in 7 years,” Commonwealth Bank analyst Vivek Dar said in a note.
“The spare capacity in OPEC+ is being called into question due to the disappointing OPEC+ supply growth,” Dar wrote, referring to the Organization of the Petroleum Exporting Countries (OPEC) and allied producers, including Russia, and the problems they faced in increasing production.
A Reuters survey showed that OPEC members’ production in January was less than the increase planned under an agreement with allies.
While the Biden administration has indicated that it may look to release strategic oil stocks to address higher oil prices, “history suggests that any strategic oil stocks withdrawal is likely to provide only temporary relief from higher oil prices.”
Nigeria’s oil minister also said that there was no need for OPEC+ to expand its planned oil production, as a possible deal between Iran and world powers would increase supplies.
The United States and Iran have been engaged in indirect nuclear talks in Vienna that could lead to the lifting of sanctions on Iranian oil sales and an increase in global supplies if a deal is reached over Iran’s nuclear programme.
Iranian officials said on Twitter on Thursday that the Western partners in the nuclear talks should make decisions on critical issues to help reach an agreement.