- Crude oil prices have risen nearly 3% on Wednesday.
- The prices were scaled down previously as Russia promised to reduce its military presence around Kyiv.
- The US along with its allies have decided to impose fresh sanctions on more sectors of Russia's economy that are critical to sustaining Ukraine's invasion.
The prices of crude oil displayed an upbeat trend, gaining around 3% on Wednesday on the back of a heavy crude stock drawdown in the US, indicating tight supplies and investors' concerns about new Western sanctions on Russia.
The prices were scaled down earlier as Russia promised to reduce its military presence around Kyiv. Earlier, the prices tumbled on Monday on expectations of lower fuel demand after Chinese authorities stated that they would impose a lockdown in Shanghai, the country’s financial hub over rising COVID-19 cases.
Crude oil prices are uptrending since 24 February 2022, the day Russia officially announced Ukraine’s invasion. The supply shortage concerns were created among the traders over the Russian oil embargo; the prices of both oil benchmarks reached 14-year high level during the first half of March 2022.
On Wednesday, Brent crude oil futures settled 2.9% higher at US$113.45/bbl while WTI futures rose US$3.58/bbl to close at US$107.82/bbl.
Source: Refinitiv Eikon
On Thursday, June delivery Brent Crude oil futures declined and last traded at US$107.41 per barrel down 3.10%, while May delivery WTI crude oil futures exchanged hands at US$102.97 per barrel, down 4.50% at 12:52 PM AEDT.
A new slew of sanctions
The US along with its allies decided to impose fresh sanctions on more sectors of Russia's economy that are critical to sustaining Ukraine's invasion.
At the same time, US crude stockpiles tumbled by more than a 3.4million barrels in the last week, cutting inventories in the world's top consumer to 410 million barrels, as per government data.
Meanwhile, the Biden administration is considering releasing 1 Mbpd for several months from the U.S. Strategic Petroleum Reserve, to cool down boiling oil prices.
Adding to that, the Organization of the Petroleum Exporting Countries (OPEC) along with its allies decided to keep the supplies tight by limiting their output to 432,000bpd.
Furthermore, in response to possible Russian gas supply cuts, Germany triggered an emergency plan to manage gas supplies. Other European countries also took steps to conserve gas.
Crude oil prices gained significantly on Wednesday on rising investors’ concerns about new Western sanctions on Russia.
Here’s how commodities performed in the last week click here