WTI traded below the psychological level of $100 per barrel for the second day in a row on Wednesday, falling as low as $94.8 per barrel. Reports of renewed negotiations between Russia and Ukraine this week, sparked hopes of a de-escalation of the crisis, driving oil prices down. Negotiations continued through Wednesday and have entered a more serious phase, as both sides seem to feel there is room for compromise and for finding a middle ground. WTI is still trading in an uptrend, but in case the price of oil drops further, support may be found around $90.0 per barrel.
Over the past few months, the oil price has been going up, driven by increasing demand and limited supply. The war in Ukraine has further increased risks of disruption in the supply of oil, pushing its price further up. This week, however, reports of a new wave of covid cases in China, forcing the country to enter lockdown once again, have pushed prices down. If the pandemic is re-ignited and countries start imposing new restrictions and re-entering lockdowns, it will signal another drop in the demand for oil and its price will decrease dramatically.
Last week, the US banned all oil and gas imports from Russia, catapulting oil prices to over $130 per barrel. The UK has similarly vowed to phase out its dependency on Russian oil and major British oil companies are already boycotting Russian oil. US sanctions raised fears that the EU would also impose an embargo on Russian energy-related products. A potential EU oil and gas ban would have a considerably higher impact, creating a severe energy crisis and driving oil prices further up. The EU however, has not yet imposed direct bans on Russian oil and gas imports, since the Eurozone relies heavily on Russian energy-related imports, with almost 30% of the crude oil imports, 47% of its coal, and over 40% percent of its gas imports coming from Russia.
Meanwhile, the US and the EU are aiming to find alternative sources of oil and put an end to their dependency on Russian oil. Negotiations of an Iran oil deal over its nuclear program have stalled though, as Russia, which is a signatory in the deal, seeks guarantees that its trade with Iran would not be affected by Russian sanctions. If the deal goes through, Iran could add as many as 900,000 barrels a day to global supplies, which might provide some relief to the energy crisis. The US, however, announced on Sunday that Russia should not expect any relief from sanctions to facilitate the implementation of the deal with Iran, causing further delay in the deal.
The content provided in this material and/or any other material that this content is referred to, whether it comes from a third party or not, is for information purposes only and shall not be considered as a recommendation and/or investment advice and/or investment research and/or suggestions for performing any actions with financial products or instruments, or to participate in any particular trading strategy and cannot guarantee any profits. Past performance does not constitute a reliable indicator of future results. TopFX does not represent that the material provided here is accurate, current, or complete and therefore shouldn't be relied upon as such. This material does not take into account the reader's financial situation or investment objectives. We advise any readers of this content to seek their own advice. Without the approval of TopFX, no reproduction or redistribution of the information provided herein is permitted.
Fill in the registration
form and click
Once you are in the client secure area, please proceed with uploading your Proof of Identity and Proof of Residence.
When your live account is approved, you can deposit funds and start trading on your chosen platform!
The website you are now viewing is operated by TopFX, a trade name of Fondex Limited, an entity which is regulated by the Financial Services Authority (FSA) of Seychelles with a Securities Dealer License No SD037 that is not established in the European Union or regulated by an EU National Competent Authority.
If you wish to proceed, please confirm that your decision will be at your own exclusive initiative and that no solicitation has been made by TopFX or any other entity within the Group.
These cookies fall under the following categories: essential, functional and marketing cookies. Marketing cookies may also include third-party cookies.