Oil prices deepened their losses by about 3.5% during trading on Tuesday, with Brent crude falling below $ 93 a barrel, with signs of easing geopolitical tensions between Russia and Ukraine.
The Russian Defense Ministry announced the return of some of its forces to their bases after carrying out exercises in the southern and western military regions, the Russian Interfax news agency reported.
The decline in crude prices comes, with investors taking profits after prices rose to their highest levels in 7 years during the last session.
Oil Prices Today
The prices of West Texas Intermediate crude futures – for March delivery – fell by 3.5%, to reach $ 92.15 a barrel.
Brent crude futures prices – for delivery in April 2022 – fell by 3.2%, recording $92.66 a barrel.
Both benchmarks hit their highest levels since September 2014 on Monday, with Brent touching $96.78, and West Texas Intermediate crude reaching $95.82.
Fears that Russia, one of the world’s largest oil and gas producers, might invade Ukraine have sent oil prices toward $100 a barrel, a level not seen since 2014.
“Profit taking has affected the market, while there was little new news, concerns about the situation in Ukraine remained unchanged,” said Tsuyoshi Ueno, chief economist at NLI Research Institute.
“Investors are in a wait-and-see mood amid uncertainty over the conflict between Russia and Ukraine, as well as the nuclear talks between the United States and Iran,” he added.
Inflation And Interest Rates
Portfolio managers remain optimistic about the oil outlook, but prices have risen more than 30% in less than 3 months and there are growing concerns about higher inflation and interest rates, prompting fund managers to lock in some profits last week.
Investors are also watching talks between the United States and Iran, with Iran’s foreign minister saying his country is “in a hurry” to reach a speedy agreement at the nuclear talks in Vienna on the condition that its national interests are protected.
For its part, the Russian Foreign Ministry said that Russian Foreign Minister Sergei Lavrov spoke to his Iranian counterpart Hossein Amirabad Allahian on Monday and indicated a “concrete move forward” in reviving the Iran nuclear deal.
German Chancellor Olaf Schulz heads to Moscow on Tuesday to meet President Vladimir Putin on a high-stakes mission to avoid war, as Russia’s largest trading partner in Europe has warned of far-reaching sanctions if it attacks Ukraine.
“Oil markets may see a real correction if the Iran-US nuclear deal takes place, or if global stocks fall further, amid concerns about inflation and monetary tightening by central banks,” said Hiroyuki Kikukawa, general manager of research at Nissan Securities. Reuters reported.
Ukrainian President Volodymyr Zelensky called on Ukrainians to raise the country’s flags from buildings and sing the national anthem in unison on February 16, a date that some Western media have described as a possible beginning of a Russian invasion.
Meanwhile, the upward review of historical oil demand by the International Energy Agency in its monthly report indicated a tightening of the global market more than previously expected by the energy watchdog in the West.
Production shortfalls from OPEC+, the Organization of Petroleum Exporting Countries and allied producers, and concerns about overcapacity are likely to keep the oil market tight, and prices could reach $125 a barrel as early as the second quarter of this year, JPMorgan said.