Oil prices fell, today, Monday, after beginning the week’s trading earlier in the session on a rise.
The markets are in a state of volatility, with investors looking for contradictory scenarios to tighten Russian energy supplies due to the Ukrainian crisis, and more crude oil entering the market amid indications of a possible nuclear agreement between Iran and world powers.
Oil prices ended their trading, last week, with a decline, after a volatile session, recording the first weekly losses in 2022.
Brent and West Texas Intermediate (WTI) crude futures rose more than $1 a barrel in early Asian trading, then fell on news of a possible summit between the United States and Russia.
Oil Prices Today
The price of futures contracts for West Texas Intermediate crude – for March delivery – decreased by 0.42%, to reach $ 91.55 a barrel.
The prices of Brent crude futures – for delivery in April 2022 – also decreased by 0.5%, recording $94.02 a barrel, after touching $95 earlier.
Confused Oil Markets
US President Joe Biden and Russian President Vladimir Putin have agreed in principle to hold a summit on Ukraine, the office of French President Emmanuel Macron said in a statement on Monday.
Oil markets have been nervous over the past days amid fears of a Russian invasion of Ukraine, which could disrupt crude supplies, but price gains were limited by the prospect of more than 1 million barrels per day of Iranian crude returning to the market.
A senior European Union official said on Friday that a deal to revive the 2015 Iran nuclear deal is “very close”.
Analysts pointed out that the market is still tight and that any addition to oil will help, but prices will remain volatile in the near term; Iranian oil is likely to return later this year.
“There is a lot of pressure in geopolitical terms and it is hard to know the answer to market movements, with Ukraine and Iran,” said National Australia Bank commodities analyst Baden Moore.
European Commission President Ursula von der Leyen stressed that Russia would be cut off from international financial markets and denied access to key exports needed to modernize its economy if it invaded Ukraine.
Vivek Dar, an analyst at the Commonwealth Bank, said: “If a Russian invasion happens, as the US and UK have warned in recent days, Brent crude futures could rise above $100 a barrel, even if an Iranian deal is struck.”
Analysts at Singapore’s OCBC Bank added that Brent crude could test $100 in the short term, possibly before the end of the first quarter.
Despite the possibility of oil reaching $100, ministers of Arab oil-producing countries said on Sunday that OPEC+ should stick to its current agreement to add 400,000 barrels of oil per day each month to production, rejecting calls to pump more to ease pressure on prices.
Strategic Oil Reserves
To avoid a surge in oil prices, RBC Capital analysts said the White House is expected to release large strategic oil reserves coordinated through the International Energy Agency.
“We expect the release of the US Strategic Petroleum Reserve to be greater than the release in November, and more barrels could be provided this time through direct selling,” RBC Capital added in a note.