International oil prices fell this Wednesday in a range of 12% to 13%, following trading on Tuesday at their highest prices since July 2008.
The price of Texas Intermediate Oil (WTI) closed down 12.1% and stood at USD 108,70 the barrel following Ukraine opened several humanitarian corridors in agreement with the Russian government.
According to data at the end of operations on the New York Mercantile Exchange (Nymex), WTI futures contracts for delivery in April cut 15 dollars compared to the previous closing.
The barrel of oil traded at a nominal historical record of USD 147 in July 2008
The US reference barrel is going through a week of great volatility in which it has gone from $130 peak registered on Sunday, a maximum not seen since the summer of 2008, to USD 103.60 at its lowest point during the current session.
Meanwhile, the price of a barrel of brent oil for delivery in May ended this Wednesday in the London futures market in USD 111.14, 13.2% less than at the end of the previous session.
North Sea crude, a benchmark in Europe, ended the day at International Exchange Futures with a decline of $16.84 compared to the last trade, when it closed at $127.98.
Parallel to an upward rebound in European stock markets, the price of Brent crude oil fell following having exceeded 133 dollars per barrel during the previous session.
Expectations for an increase in supply
Meanwhile, the United Arab Emirates (UAE) said they will urge their fellow members of the OPEC+ to increase production of oil faster, a drastic turn that might put the country once morest other members of the alliance led by Saudi Arabia and Russia.
“We are in favor of production increases and will encourage OPEC to consider higher production levels,” he said on Wednesday. Yousef Al OtaibaUAE ambassador to Washington, in a statement, which was reported earlier by Financial Times.
OPEC argued that the price increase was not linked to supply, but to the war in Ukraine
The UAE did not consult its proposal with other OPEC+ members before releasing the statement, he told Bloomberg a person familiar with the matter. There was no immediate comment from the Saudi Arabian Oil Ministry. The declaration might reignite tensions between the two Persian Gulf statestraditional allies who, however, fell last year in a relentless dispute over production levels.
The UAE’s support for increased production “is important for stabilizing global energy markets,” US Secretary of State Mr. Anthony Blinken. It is vital “to ensure that there remains an abundant supply of energy throughout the world.”
reluctant coalition
The Organization of the Petroleum Exporting Countries and its allies so far have resisted calls from the White House and other big oil consumers to ramp up production faster, arguing that the recent rise in prices to nearly $140 a barrel in London is due to geopolitical tensions rather than true supply shortages.
At its most recent meeting, the group spent just 13 minutes assessing the market before deciding to stick to its plan for gradual production increases. There was no discussion regarding the Main cause of high prices: the Russian invasion of Ukraine.
Helping Western nations in their efforts to wean themselves off Russian crude oil might lead to a crisis within OPEC+
Any proposal to increase production, especially considering that help western nations in its efforts to wean itself off Russian crude has the potential to create tensions within OPEC+. In a call last week with the crown prince of Saudi Arabia, Mohamed Bin Salman, President Vladimir Putin condemned any measure that aims to “politicize the world’s energy supply”. Since then, the The Kremlin has threatened to limit energy exports to Europe in retaliation for the sanctions.
clash of allies
The last time the UAE called for a change in OPEC+ production policy was in july 2021when the country was pushing for a higher individual production quota. Saudi Arabia initially rejected the proposal. and the dispute threatened to break the alliance.
A compromise was eventually struck that allowed the UAE a more generous production cap and resulted in the group’s current plan to add 400,000 barrels a day to the market every month. Even before the Russian invasion of Ukraine caused instability in commodity markets, the International Energy Agency and the US President’s Administration, Joe Bidenhad been criticized for being too small.
The Brent crude futures might rise to $240 per barrel this summer if Western countries impose broader sanctions on Russian oil exports, according to industry consulting firm Rystad Energy AS. The supply collapse would be the largest possible oil supply shortage since the 1990 Gulf War, when oil prices doubled, Rystad’s head of oil markets wrote in a report, Bjornar Tonhaugen.
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