Global oil prices are falling: what are the main reasons?
13 February 11:19
Oil prices fell on Friday. The main reason for the decline in prices was the easing of geopolitical tensions in the Middle East, particularly the conflict between the US and Iran.
This was reported by "Komersant Ukrainian" with reference to a Reuters report.
Brent crude oil futures fell 6 cents to $67.46 per barrel, continuing yesterday’s sharp 2.7% drop. US light crude oil WTI also lost value, falling 12 cents to $62.72 per barrel.
Overall, Brent has lost about 0.8% over the week, and WTI has lost 1.1%, indicating a shift in investor sentiment after the recent peak.
Earlier this week, oil prices rose on fears that the US could attack key Middle Eastern producer Iran over its nuclear program.
However, comments by US President Donald Trump on Thursday that the US could reach an agreement with Iran within the next month led to a decline in prices in the previous session.
“Oil prices are falling amid signs that the US is seeking more time to reach a nuclear deal with Iran, reducing the short-term geopolitical risk premium,” IG analyst Tony Sycamore said in a note.
Consumption forecasts
Additional pressure on prices is coming from a recent report by the International Energy Agency.
IEA experts predict that global oil demand growth this year will be weaker than previously expected.
At the same time, the total supply of raw materials on the market may exceed consumer demand.
Despite the pessimistic news, some market experts note that prices have not fallen critically low, which may indicate the formation of a certain bottom and a slowdown in the downward trend in the near future.
The Venezuelan factor and US reserves
The situation is exacerbated by news from the American continent, where there has been a significant increase in domestic crude oil reserves. In addition, a return of significant volumes of oil from Venezuela is expected.
The US administration plans to issue new quotas to ease sanctions against the Venezuelan energy sector.
According to experts, production in this country could increase from the current 880,000 to 1.2 million barrels per day in the coming months.
Sales of oil from Venezuela’s controlled resources have already brought in more than $1 billion and, according to forecasts by the relevant ministry, will bring in another $5 billion in the near future.
