Oil prices slide due to Iranian oil supply amid Russia-Ukraine tensions

By Ishika Dangayach on Feb 18, 2022 | 04:38 AM IST

• Brent crude drops $1.87 to $91.09 a barrel

• WTI crude declines $1.94 to $89.84 a barrel

Oil prices fell on Friday as the possibility of additional supply from Iran overcame concerns about Russian invasion in Ukraine, which may hamper supply.

International benchmark Brent crude tumbled $1.87 to $91.09 a barrel by 8:08 AM ET, after touching its highest since October 2014 at $96.16. The U.S. benchmark, West Texas Intermediate (WTI) crude, plummeted $1.94 to $89.84 a barrel, after hitting $94.94, the loftiest since September 2014.

The Ukraine-Russia situation reached a new low point on Friday, with reports of new outbreaks of violence and ceasefire breaches.

Russian soldiers prepared to conduct further drills near Ukraine's borders, as American officials continued to advocate for a diplomatic solution.

The Russian invasion might momentarily send oil prices beyond $100 per barrel. Europe would face a severe energy shock since Russia is an important provider of energy to Europe.

After touching their highest levels since September 2014, both benchmark contracts fall drop in nine weeks, with a deal in the works to resurrect Iran's 2015 nuclear accord with world powers.

According to diplomats, the draft agreement lays out a series of procedures that would eventually lead to the lifting of oil sanctions. This would return around 1 million barrels of oil to the market every day, although the timeframe is undetermined.

On Wednesday, tight oil supply drove Brent crude's six-month market structure to its largest backwardation on record.

Meanwhile, the imminent threat is causing global financial markets to tremble. On Thursday, the Dow dropped more than 600 points in one day, its worst daily decline since November as investors fled riskier assets amid geopolitical tensions between Russia and Ukraine.

With inputs from Reuters

Picture Credits: FT

Stock View