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Highlights
- Crude oil prices tore heavy losses of the initial trading session on Wednesday.
- The prices tumbled significantly during the initial sessions on Wednesday after Russia promised to scale down its military operations around Kyiv.
- the Organization of the Petroleum Exporting Countries (OPEC) along with its allies decided to keep the supplies tight by limiting their output to 400,000 bpd.
Crude oil prices tore heavy losses of the initial trading session on Wednesday amid fresh concerns of tight fuel supplies on growing prospects of new Western sanctions against Russia. The significant trend reversal in the prices of crude oil had been witnessed despite signs of progress that emerged from peace talks between Russia and Ukraine.
On Monday, the prices tumbled on expectations of lower fuel demand after Chinese authorities stated that they would shut the country's financial hub - Shanghai for a COVID-19 testing blitz over nine days.
The prices started their bull run on 24 February 2022 after Russia officially announced Ukraine’s invasion. The prices of both oil benchmarks hit 14-year highs during the first half of March 2022, after the US imposed sanctions on Russian oil imports.
Source: EODHD/Others Eikon
On Wednesday, June delivery Brent Crude oil futures declined and last traded at US$109.38 per barrel up 1.55%, while May delivery WTI crude oil futures exchanged hands at US$105.92 per barrel, up 1.61% at 5:41 PM AEDT.
Also Read: Crude oil surges to 14-year highs on delays in Iranian talks
Falling stockpiles
The focus turned to tight supplies after the American Petroleum Institute industry group reported crude stocks tumbled by 3 million barrels in the week ended 25 March.
The crude oil prices tumbled significantly during the initial sessions on Wednesday after Russia promised to scale down its military operations around Kyiv but reports of attacks continued.
Meanwhile, the US and its allies plan new sanctions on other sectors of Russia's economy that are critical to sustaining Ukraine's invasion.
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 400,000bpd.
On top of that, the UAE and Saudi Arabia, key OPEC+ members said that the group would not look to take action against Russia for its invasion of Ukraine.
Must Watch: As Russia-Ukraine War Intensifies, Commodities Also Soars
In the meantime, the US is seeing options to release oil from Strategic Petroleum Reserves that, if carried out, could be bigger than the sale of 30 million barrels earlier this month.
Moreover, a possible revival of Iran’s export restrictions may help to cool the immense tight supplies of crude oil in the international market.
Also Read: Crude oil slides from multi-year highs as Iran talks rev up
Bottom Line
Crude oil prices gained significantly on Wednesday on fresh concerns about new Western sanctions against Russia. The prices dipped in initial sessions after Russia promised to scale down its military operations around Kyiv but reports of attacks continued.
Here’s how commodities performed in the last week click here
