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Oil prices fell sharply, does the U.S. strategy to increase crude oil supply work?

2022-03-10T08:40:00.675Z


International crude oil prices are changing rapidly. Affected by geopolitical conflicts and the news that the United States and Europe are planning to ban Russian oil, international oil prices hit $139 a barrel earlier, a new high since 2008; but just yesterday (March 9)


International crude oil prices are changing rapidly.

Affected by the geopolitical conflict and the news that the United States and Europe are planning to ban Russian oil, the international oil price hit $139 a barrel earlier, a new high since 2008; but just yesterday (March 9), the U.S. crude oil index and international crude oil index suddenly A sharp fall, the market's anxiety seems to have eased.


On March 9, local time, the U.S. crude oil benchmark West Texas Intermediate (WTI Crude) fell $15 to close at $108.7 a barrel, a drop of more than 12%.

Brent Crude, the international crude oil benchmark, also fell $16.84, or 13.16%, to close at $111.14 a barrel.

Just two days ago, WTI crude oil and Brent oil prices once reached as high as $130.5 and $139.13, both hitting new highs since July 2008.

Oil prices retreated on news that members of the International Energy Agency may release more strategic crude oil reserves.

(Associated Press)

Analysts pointed out that the sudden drop in oil prices was related to multiple factors that prompted investors to take profits.

First, Ukrainian President Volodymyr Zelensky revealed his willingness to make concessions.

In an interview with the American Broadcasting Corporation (ABC) on March 8, he pointed out that he had long been indifferent to joining NATO, and said that he could discuss the future of the Donbas region and Crimea with the Russian side to seek a compromise solution.

Zelensky's transformation has raised expectations for whether the fighting can take a break.

If the situation in Ukraine eases in the coming weeks, oil prices are expected to fall further.

Second, although the United States has announced a ban on Russian oil imports, the European Union has not followed suit.

Bank of America had earlier predicted that global markets could face a shortfall of 500 barrels a day if most of Russia's oil is cut off.

Now that the EU has not followed the US to ban Russian oil imports, the impact has been reduced accordingly.

Finally, under the encouragement and pressure of the United States, many oil-producing countries agreed to increase production.

The UAE's ambassador to the US, Yousef Al Otaiba, said in an announcement on the embassy's official website yesterday that the UAE is inclined to increase oil production and will encourage the Organization of the Petroleum Exporting Countries (OPEC) to consider raising production.

It is worth mentioning that the "Wall Street Journal" reported only a few days ago that the crown princes of Saudi Arabia and the United Arab Emirates have refused to speak to US President Biden in recent weeks.

In addition, Iraqi Oil Minister Ihsan Ismaae also said on the same day that Iraq can also increase production if OPEC and production-cutting partners request it.

In this regard, John Kilduff, a partner at the U.S. Again Capital Asset Management Company, pointed out that the oil price exceeded $130 a barrel in the past few days, reflecting the market’s concerns about the complete interruption of Russian oil supply, OPEC’s insistence on not increasing additional production, and the continued deterioration of the situation in Ukraine.

Concerns on these fronts now appear to have diminished.

For details, please read the 307th issue of "Hong Kong 01" Electronic Weekly Newsletter (March 7, 2022) "The

US fails to increase the supply policy and the oil price may exceed $147

".

Click here

to try out the weekly e-newsletter for more in-depth reports.

Source: hk1

All news articles on 2022-03-10

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