Oil prices pulled back on Wednesday, down from seven-year highs attained on Tuesday when the market thought sanctions imposed on Russia would disrupt the global oil supply.
Brent oil, a global benchmark for Nigerian oil, pulled back from $99.40 per barrel it traded on Tuesday to $96.70 a barrel on Wednesday. The U.S West Texas Intermediate (WTI) dipped to $91.34 a barrel from the $94.61 it traded in the previous session.
Crude oil prices jumped on Tuesday after Western nations imposed sanctions on Russia for announcing plans to recognise two Ukrainian breakaway nations against United Nations Charter.
The sanctions from the European Union, United States, Britain, Australia, Canada and Japan were directed towards Russian banks and elites while Germany had stopped a major gas pipeline project from Russia. Still, the United States insisted that sanctions will not target oil and gas flows.
However, oil experts expect oil prices to continue receiving some level of support from the ongoing tension between the two nations for the time being, especially with some Western nations saying they may impose more sanctions if Russia invaded Ukraine.
“The prospect of more conflict in Ukraine should safeguard the geopolitical risk premium,” said Stephen Brennock at brokerage PVM Oil.
“There is a risk that Russia will retaliate to the sanctions by reducing deliveries of its own accord,” Commerzbank analyst Carsten Fritsch said.