Crude oil futures are sinking hard this afternoon. Both Brent and West Texas fell more than 10%, given the possible turn to fears of lack of supply due to the Russian invasion of Ukraine. Prices plummeted as much as 15% after Ukrainian President Volodymyr Zelensky indicated that he is prepared to make certain compromises with Russia to end the war.
Earlier, the United Arab Emirates said it would ask OPEC+ to ramp up oil output faster, a dramatic turnaround that could pit the country against other members of the Saudi-Russian-led alliance. “We are in favor of production increases and will encourage OPEC to consider higher production levels,” Yousef al-Otaiba, the UAE’s ambassador to Washington, said in a statement.
The dizzying rise of oil is contributing to a rise in inflation to the highest level in decades. U.S. gasoline prices hit a record Monday, while diesel hit 2008 highs. Rising prices at gas stations amid Russia’s invasion of Ukraine continue to thwart President Joe Biden’s efforts to control inflation and ease the pain of American consumers.
“The oil market will remain persistently volatile and crude prices will remain supportive until there is a major de-escalation in the war in Ukraine,” said Ed Moya, senior market analyst at Oanda.
The US and UK decided on Tuesday to halt imports of Russian oil, though the EU has been reluctant to commit to similar action. The International Energy Agency has announced that it will soon release reserves of almost 63 million barrels of crude oil and its products, but the message has done little to cool prices.
Against the backdrop of fast-moving markets, OPEC+ remains on the sidelines, holding on to its 400,000-barrel-per-day production increase. Russia is a major supplier of refined products to Europe and the threat of running out of fuel supplies in the region has sent diesel markets into a frenzy. US distillate inventories fell to the lowest level since November 2014, declining by 5.23 million barrels, according to government data.
“The market is waiting for the domino effect of the EU announcing a ban. However, with the big oil companies announcing that they will not touch Russian oil, there is already a de facto ban,” said Keshav Lohiya, founder of Oilytics consultancy. .
These are the US plans to help Europe reduce its dependence on Russian gas
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