Adedapo Adesanya
By Adedapo Adesanya
On Friday, the price of crude oil appreciated at the global market as information went out that peace negotiations between Russia and Ukraine have stalled.
As a result, the value of the Brent rose by $1.49 or 1.40 per cent to $108.10 per barrel, while the United States West Texas Intermediate (WTI) gained $2.27 or 2.2 per cent to sell for $105.3 per barrel.
Despite the increase recorded yesterday, the price of the two benchmark contracts closed the week lower by over 5 per cent, after hitting 14-year highs nearly two weeks ago.
The war in Ukraine is now into its fourth week with negotiations ongoing and it had been reported that significant progress had been made on a peace plan but fresh reports say that the position of the two sides was still far from reconciliation, which acted as more fuel for oil prices.
The International Energy Agency (IEA) estimates that 3 million barrels daily of Russian oil supply could be lost starting in April higher than the 1 million barrels per day expected before.
The supply crunch from traders avoiding Russian barrels and dwindling oil stockpiles were instrumental to driving prices higher but prices have been pressured by worries about demand with COVID-19 cases surging in China while stumbling nuclear talks with Iran have been a wild card on the market.
These latest developments have reinforced uncertainty on the oil market, further enhanced by an unsuccessful visit of the UK’s Prime Minister, Mr Boris Johnsom to the United Arab Emirates (UAE) and Saudi Arabia to try and get them to agree to boost production after the ruler of both countries refused to speak to US President Joe Biden.
Neither Saudi Arabia nor the UAE—the two OPEC members with the spare capacity to increase output substantially—want to risk a breakup of the Organisation of the Petroleum Exporting Countries (OPEC) and its allies, OPEC+.
Meanwhile, output from the OPEC+ producer group in February undershot targets even more than in the previous month.
US oil producers have also shown considerable constraint since the conflict in Ukraine began. Energy firms in the world’s largest oil producer this week reduced the number of oil rigs active in the country by 3 to 524 this week, according to energy services firm Baker Hughes.
