A 3D printed oil pump jack can be seen in front of the graphic shown in this illustration, April 14, 2020. REUTERS / Dado Ruvic / Illustration
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- Brent rises to its highest level since 2012, WTI the highest since 2008
- Exports of Russian oil and gas have so far been exempt from sanctions
- The nuclear deal with Iran is nearing completion – analysts say
- The analyst says the deal with Iran cannot replace the unrest in Russia
Houston, March 3 – Oil fell 2% on Thursday after reaching unprecedented prices as sellers jumped in hopes that the United States and Iran would soon agree on a nuclear deal that could added barrels to the tight world market.
Trade was volatile, with crude oil prices jumping early to multi-year highs over concerns about Russia, which exports 4 to 5 million barrels a day (bpd) of crude oil, the world’s second-largest after Saudi Arabia. Following Russia’s invasion of Ukraine, companies are now avoiding Russian supplies and fighting for barrels elsewhere.
Oil markets are in an “explosive mood” due to growing outrage against Russia, said Phil Flynn, an analyst at Price Futures Group. “People around the world do not want to deal with a country that commits these atrocities in Ukraine.”
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Brent futures fell $ 2.47, or 2.2 percent, to $ 110.46 a barrel, while West Texas Intermediate (WTI) crude fell $ 2.93, or 2.6 percent, to $ 107. $ 67.
Both benchmarks rose to multi-year highs during the session, with Brent rising to $ 119.84, the highest level since May 2012, and WTI reaching its highest level since September 2008 at 116, $ 57.
Washington and its Western allies have imposed sanctions on Russia, but measures have so far not targeted Russia’s oil and gas exports. A new round of sanctions announced by the White House on Wednesday banned the export of specific refining technologies, making it difficult for Russia to modernize oil refineries. Read more
Traders remain wary of Russian oil. At least 10 tankers failed to find buyers on Wednesday, market sources said. Read more
Canada has said it will remove Russia and Belarus’ most-favored-nation status as trading partners and provide additional military assistance to Ukraine. Read more
Brent’s global benchmark jumped nearly 25 percent after Russia’s invasion of Ukraine on February 24, an action Moscow calls a “special operation.” Brent’s six-month spread peaked at a record high of over $ 21 a barrel, indicating very limited deliveries.
Media reports suggest that the United States and Iran have almost completed a deal that could return more than a million barrels a day of oil or about 1% of global supplies back to market.
Negotiations to renew the pact have been under way in Vienna for 10 months. Diplomats are believed to be in the final stages of negotiations. Read more
But a report Thursday by the International Atomic Energy Agency (IAEA), the UN’s nuclear supervisory body, found that enriched uranium reserves accumulated by Iran violate its 2015 nuclear deal, with the country close to its ability to Make a Nuclear Bomb | Read more
IAEA chief Rafael Grossi will visit Tehran on Saturday in a bid to resolve outstanding issues. Read more
“Grossi’s trip increases the chances of resuming the (nuclear deal) to 70% from 60%,” said Eurasia Group, a consultant, noting that “the deal is likely this month and immediately in the next few days.”
This easing of supplies can fill only part of the gap left by buyers restricting purchases of Russian oil, which accounts for about 8% of world oil exports.
“We expect Russian oil exports to fall by 1 million barrels per day from the indirect impact of sanctions and voluntary actions by companies,” said Rystad Energy CEO Jarand Ristad. “Oil prices are likely to continue to rise – potentially over $ 130 a barrel.”
The Organization of the Petroleum Exporting Countries, Russia, and their allies, a group known as OPEC +, on Wednesday stuck to an existing plan to gradually increase production by 400,000 barrels a day, ignoring consumer calls for more. Read more
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Additional reports by Scott DiSavino in New York, Shadia Nasrallah in London and Florence Tan and Sonali Paul in Singapore; Edited by Margerita Choi, Kirsten Donovan and David Gregorio
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