Global benchmark Brent fell 62 cents to $89.34 a barrel, while US crude settled 74 cents lower at $86.61 a barrel, seeing both contracts between positive and negative territory.
Oil prices fell on Thursday after Brent crude hit a seven-year high above $90 a barrel, as markets tightened monetary policy as the US Federal Reserve tightened monetary policy too soon, with concerns about tight supplies around the world. . Global benchmark Brent fell 62 cents to $89.34 a barrel, while US crude settled 74 cents lower at $86.61 a barrel, seeing both contracts between positive and negative territory.
Prices jumped on Wednesday as Brent climbed above $90 a barrel for the first time in seven years amid tensions between Russia and the West. Threats to the United Arab Emirates from Yemen’s Houthi movement raised panic in the oil market. Russia, the world’s second-largest oil producer, and the West are at loggerheads over Ukraine over fears that energy supplies to Europe could be disrupted, although concerns have focused on gas supplies rather than crude.
Russia said it was clear the United States was unwilling to address Moscow’s main security concerns in its standoff over Ukraine, but kept the door open for dialogue. US Secretary of State for Political Affairs Victoria Nuland said the US expected Russia to study Washington’s offer and return to the negotiating table. “The market is very uncertain given the headlines on the Russia-Ukraine situation,” said Phil Flynn, senior analyst at Price Futures Group. “There’s uncertainty about what’s going to happen.”
Russia, the world’s second largest oil producer, and the West face off over Ukraine
Weighing in on prices, the US Federal Reserve said on Wednesday that it may raise interest rates in March and plans to end its bond purchases that month to tame inflation. The US dollar climbed after the announcement, making oil more expensive for buyers using other currencies. On Thursday, the dollar index rose to its highest level since July 2021.
“The Ukraine crisis is preventing further price declines, as there are still concerns that Russian oil and gas delivery could be disrupted in the event of a military escalation,” Commerzbank said in the morning after the price drop.
Markets have started turning their attention to the February 2 meeting of the Organization of the Petroleum Exporting Countries (OPEC) and Russia-led allies, known as OPEC+. OPEC+ is likely to stick with the planned increase in its oil production target for March, multiple sources in the group told Reuters.
It has raised its production target by 400,000 barrels per day (bpd) every month since August as it eases record production cuts made in 2020. However, the group has faced capacity constraints that have prevented some members from producing at their quota levels.
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