Russia's attack on Ukraine, new outbreaks of coronavirus and local lockdown in China, guerrilla attacks on Saudi refinery - it seems that all these factors can recently affect oil prices and market fluctuations.
WTI crude oil futures jumped 3 percent today to $108 per barrel, while the price of a barrel of Brent is above $111.
EU announces embargo on oil from Russia
Crude seems to have risen for the third consecutive session, and early in the new week, the rises may be primarily linked to news from the frontline, where there are no clear signs of de-escalation. This morning Ukraine announced that its troops will not surrender in Mariupol.
There was also unofficial information that the European Union may join the US and impose an embargo on Russian oil imports. As if all this was not enough there were also attacks on Saudi Aramco refineries by Houthi rebels. This may have reduced production.
Possible deficit: 700 thousand barrels per day
OPEC+ exceeded its production target by more than 1 million barrels per day in February, but the market is still bracing for a major disruption in crude supplies from Russia. Last week, the IEA reported that there could be a supply deficit of 700,000 barrels per day in the second quarter. The Western sanctions imposed on Moscow and the reluctance of buyers may lead to a decline in Russian oil supplies by 3 million barrels per day since April.
Although only a few days ago, oil prices dropped from USD 130 to USD 100 per barrel, the situation in this market may still be tense and the volatility even more significant than before. The risk factors seem to be increasing rather than decreasing.
Daniel Kostecki, Director of the Polish branch of Conotoxia Ltd. (Forex service)
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