Amidst escalating tensions in Ukraine, global oil prices took a downward turn as Russia announced plans to increase its oil exports through Western ports.
The prospect of heightened supply from Russia, coupled with concerns over weakening demand in sectors like jet fuel and cautious trading ahead of the Federal Reserve’s interest rate decision, contributed to the slide in oil prices.
The Brent crude oil, against which Nigerian oil is priced, slipped by 15 cents to $86.74 a barrel while U.S. West Texas Intermediate (WTI) prices fell by 13 cents to $82.03.
Both benchmarks had reached four-month highs in the previous session, driven by lower crude exports from Saudi Arabia and Iraq, as well as indications of stronger demand and economic growth in China and the U.S.
Analysts noted that concerns regarding Russian oil supply had intensified following attacks on the country’s oil infrastructure by Ukrainian forces.
JP Morgan analysts predicted that these attacks could reduce Russian crude runs by up to 300 thousand barrels per day, leading to increased crude oil exports.
However, uncertainty loomed over how U.S. interest rates would evolve ahead of the Federal Reserve meeting.
“The market may be in consolidation mode awaiting signals on rate cuts from this week’s FOMC meeting,” remarked Suvro Sarkar, lead of DBS Bank’s energy sector team.
Furthermore, analysts expressed caution regarding demand growth in the jet fuel sector, despite expectations of peak summer travel.
Global economic uncertainties and geopolitical tensions continued to weigh on market sentiment, prompting investors to adopt a more cautious stance towards oil prices in the near term.
