Oil prices are falling on global markets: what caused the drop in prices
13 May 10:14
Oil prices are falling on the morning of Wednesday, May 13, following gains over the past three consecutive sessions; traders continue to monitor the situation in the Middle East and await new decisions from the parties involved in the U.S.-Iran conflict, reports "Komersant Ukrainian", citing Interfax-Ukraine.
July Brent futures on the London ICE Futures exchange were trading at $106.32 per barrel as of 8:07 a.m., down $1.45 (1.35%) from the previous session’s close. On Tuesday, these contracts rose by $3.56 (3.42%) to $107.77 per barrel.
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WTI crude oil futures for June delivery on the New York Mercantile Exchange (NYMEX) have fallen by $1.45 (1.42%) to $100.73 per barrel. At the close of the previous session, their price had risen by $4.11 (4.19%) to $102.18 per barrel.
The rise in oil prices earlier this week was driven by fading hopes for a quick resolution to the Middle East crisis. Another attempt to agree on the terms of a peace deal between Washington and Tehran ended without results.
U.S. President Donald Trump told reporters on Monday that he was not satisfied with the proposals submitted by Iran to end the conflict. He also stressed that the ceasefire in the region is in an extremely fragile state.
On Tuesday, the White House chief announced that he intends to discuss the Iranian crisis in detail with Chinese President Xi Jinping during a state visit to China from May 13 to 15. At the same time, Trump noted that Washington would not need Beijing’s help in resolving the situation and expressed confidence that his country would prevail in the standoff with Iran—“peacefully or otherwise.”
The blockade of the Strait of Hormuz due to the conflict has led to a sharp decline in oil supplies to the global market.
“Given the duration and scale of the supply reduction, which has already exceeded 1 billion barrels, oil prices are likely to remain above $80 per barrel until the end of the year,” according to an analytical note from the Eurasia Group.
Meanwhile, U.S. oil inventories fell again last week. The American Petroleum Institute (API) reported yesterday that U.S. oil reserves for the week ending May 8 decreased by 2.19 million barrels. Analysts surveyed by Trading Economics had expected a decline of 1.65 million barrels.
The API receives data from refinery operators, oil storage facilities, and pipeline operators on a voluntary basis. U.S. Department of Energy data on oil inventories, which is more important for the market, will be released on Wednesday at 5:30 p.m. ET.
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