Oil prices fell more than 17% on Wednesday after the United Arab Emirates said it would support increasing supply into a market that was in disarray due to supply disruptions caused by sanctions imposed on Russia after it invaded Ukraine.
Brent crude fell more than 17%, or $22, during a sharp selloff before recovering some of its losses to trade down $17.16, or 13.4%, at $110.82 a barrel at 2:02 p.m. ET (1902 GMT). Crude oil in the United States was down $15.44, or 12.5 percent, to $108.26.
We favor increased output and will encourage OPEC to consider increased output levels “According to a statement issued by the UAE Embassy in Washington, Ambassador Yousuf Al Otaiba.
They can most likely bring 800,000 barrels to market very quickly, if not immediately, bringing us one-seventh of the way to replacing Russian supply “Mizuho’s director of energy futures, Bob Yawner, agreed.
Just a week ago, OPEC+ blamed the price rise on geopolitics rather than a lack of supply, and decided not to increase output any faster than it already was. The group has been aiming for a monthly increase in output of 400,000 bpd while resisting pressure from the United States and other consuming countries to pump more. As part of the response, if there is a need and our governments agree, we can bring more oil to the markets “Faith Birol, the EIA’s chief executive officer, stated.
Birol described the EIA’s decision to release 60 million barrels of oil from strategic reserves last week as “an initial response.”
Oil prices had already fallen earlier in the session after the International Energy Agency said reserves could be depleted further to compensate for Russian supply disruptions.
Since Russia’s invasion of Ukraine on February 24, the market has risen by more than 30%, reaching a high of more than $139 per barrel on Monday. The United States banned oil and gas imports from Russia on Tuesday, adding to the disruption in exports caused by a slew of punitive economic sanctions imposed on Russia by governments around the world following the invasion.
Russia exports approximately 7 million barrels per day of crude and fuel, accounting for approximately 7% of global supplies.
Last week, crude and gasoline inventories in the United States fell, while stocks in the Strategic Petroleum Reserve fell to their lowest level since July 2002. EA/IS
The Relative Strength Index for Brent, a momentum indicator, indicated that the market was due for a drop.
“There was definitely room for a little bit of a chill here,” Yawner said. “You were going to run out of buyers at these levels.” Iran is another potential source of additional oil supply, having been in talks with Western powers for months about resuming its 2015 nuclear deal, which was terminated by then-US President Donald Trump in 2018. On Wednesday, Iran’s chief negotiator in the Vienna talks returned to the Austrian capital.
