Oil prices have hit a record low: the main factors behind the decline
27 March 10:21
Oil prices posted their sharpest weekly decline in six months after U.S. President Donald Trump announced that he would suspend attacks on Iran’s energy infrastructure for 10 days.
This was reported by "Komersant Ukrainian", citing Reuters.
Brent crude futures fell by 84 cents, or 0.8%, to $107.17 per barrel as of 03:53 GMT, while futures for U.S. West Texas Intermediate crude lost $1.02, or 1.1%, to $93.46 per barrel.
Both benchmarks were trading 4.6% lower for the week, despite Brent rising 5.7% and WTI 4.6% on Thursday amid fears of further escalation of the war.
“Despite talk of de-escalation, oil is trading based on the duration of the war, not just the headlines. Any direct damage to oil infrastructure or a prolonged conflict could force markets to quickly reassess the price,” said Priyanka Sachdeva, an analyst at Phillip Nova.
According to experts, the war has deprived the world of 11 million barrels of oil per day, and the International Energy Agency describes this crisis as worse than the two oil shocks of the 1970s and the Russian-Ukrainian gas war combined.
Analysts at Macquarie Group stated that if the war begins to wind down soon, oil prices will fall rapidly in the coming months but will still remain above pre-conflict levels. However, they noted that prices could rise to $200 if the war drags on until the end of June.
“The pressure on the market is growing every day. Asian countries are drawing down buffer stocks and weighing adjustments to demand,” said Mukesh Sahdev, founder and CEO of the Australian consulting firm XAnalysts.
What led up to this
As a reminder, after the start of the U.S.-Israeli operation against Iran, global oil prices rose sharply. This is due to the fact that Iranian forces blocked the Strait of Hormuz, through which Gulf countries supply oil to the global market.
These events allowed Russia to increase its revenue from energy sales. On March 24, Bloomberg reported that Russia’s oil revenue had returned to March 2022 levels.
According to the publication, Moscow’s average daily revenue from raw material exports in March of this year doubled compared to the start of the year—from $135 million to $270 million.
