Both Brent and U.S. crude oil futures fell below $100 a barrel for the first time since late February. Before that, oil prices hit a 14-year high on March 7.
According to Reuters, in the session, the price of Brent oil futures fell sharply by 6.99 USD, or 6.5%, to 99.91 USD/barrel. WTI crude oil fell $6.57, or 6.4%, to $96.44 a barrel. Brent at the time of falling to as low as 97.44 USD and WTI at 93.53 USD.
Brent oil previously reached a level of 139 USD/barrel.
Russia is the world’s largest exporter of crude oil and fuels. Since the outbreak of hostilities in Ukraine, many buyers have shied away from Russian oil, fueling fears of disruptions to supplies of millions of barrels of daily crude.
On March 15, a Ukrainian negotiator said negotiations with Russia on a ceasefire were ongoing.
“While we welcome reports of promising negotiations, at this stage it is difficult to see how either side will offer concessions.”research from analytics firm Kpler says.
Investors hope there will be progress in negotiations to resolve the Russia-Ukraine conflict, helping to boost global oil supplies.
In addition, on March 15, Russia also proposed to allow the restoration of the Iran nuclear deal in the near future. Restoring the nuclear deal could help Iran get sanctions relief on its oil sector and resume crude exports.
In the wake of the Russia-Ukraine conflict, the Organization of the Petroleum Exporting Countries said that oil demand in 2022 faces challenges and inflation increases as crude oil prices soar.
China’s reported spike in daily COVID-19 cases also raises concerns that the country’s current rate of consumption will slow. “It is estimated that a major shutdown in China could put 0.5 million bpd of oil consumption at risk,” said Louise Dickson, senior oil market analyst at Rystad Energy.
Meanwhile, the US Federal Reserve is expected to raise interest rates by 25 basis points on March 16, the first time in four years, to combat inflation. This could strengthen the dollar and reduce demand for oil and other commodities denominated in the dollar.
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