The Fall of Oil Prices and Putting More Pressure on Russia

Wednesday’s volatile trading saw oil prices fall to $125 per barrel. The drop in prices comes from Russia’s announcement of a new ceasefire with Ukraine to allow civilians to leave Ukraine. Investors are analyzing the Russian oil export sanctions more seriously. Ukraine appears to have abandoned its bid to join NATO. Additionally, more countries are reconsidering their decision to impose sanctions on Russian oil. The global spread of such news has affected the price of oil.

In the last few days, the price of Brent oil reached more than $133 per barrel, but after the spread of some news, it reduced significantly. Also, West Texas Intermediate (WTI) oil has fallen below $120 per barrel, a significant decline from recent days.

Oil prices have decreased following the International Energy Organization’s head’s announcement last week that the agency was considering releasing 60 million barrels of oil reserves to compensate for supply disruptions caused by Russia’s invasion of Ukraine. He also highlighted that this is only the first stage and that additional oil reserves can be brought to market if necessary. Oil prices have climbed to more than $133 per barrel on Monday as a result of Russia’s invasion of Ukraine. The world has not experienced such prices since 2008.

Replacement of Russia’s Oil in the markets

The United States and the United Kingdom stated that they would gradually phase out Russian oil imports. Shell has also announced a halt to its purchases of Russian crude oil. According to JP Morgan, over 70% of Russia’s offshore oil is struggling to find customers.

Iran has been cited as a potential source of oil supplies. Western powers have been negotiating with Iran to revive a nuclear deal for months. Iran’s return to the world’s oil markets and a corresponding decrease in price volatility are possible if all parties revive the mentioned agreement. On the other hand, the US may lift some of Venezuela’s sanctions and allow the country to resume oil exports. This type of event would have a significant impact on oil prices. These two countries could easily replace Russian-sanctioned oil on global markets.