After witnessing its biggest plunge in two years, oil prices went down, losing their gains to trade lower on Thursday. In the Thursday session, the traders debated the market’s concerns over the supply-chain disruptions.
Russia has pledged to fulfill its contractual obligations of the energy supply. The traders debated if the supply concerns were overdone or if the concerns would turn into a reality.
After Russia’s full-scale invasion of Ukraine, the oil markets and the energy sector have been the most volatile in the last two years. The global benchmark Brent Crude recently recorded its biggest decline since April 2020, just a few days after hitting the 14-year high of over $139 per barrel.
After rising in the session before, Brent Crude went down $1.66, or 1.49%, to $109.48 a barrel. The U.S. West Texas Intermediate (WTI) crude oil went down $3.06 (-2.80%) to $106.37 a barrel, losing much of its intraday gains.
In one of the government meetings, President Putin addressed that Russia- a major energy producer supplying one-third of the European gas and 7% of global oil, would continue to meet its contractual obligations on energy supplies.
Yet, oil from the world’s largest crude exporter- Russia, is being shunned because of its full-scale invasion of Ukraine. There is also a significant uncertainty over where the replacement supply would come from to fulfill the requirement, especially in Europe.
Earlier, on Wednesday, Brent had fallen 13% after the UAE’s ambassador to Washington said that his country would encourage the Petroleum exporting countries to consider more output.
UAE and Saudi Arabia, with spare capacity, and some other producers in the OPEC+ alliance are struggling to meet the output targets because of the infrastructure underinvestment over the years.
The supply could also come from stockpile release coordinated by International Energy Agency and the growing U.S. output. Finding alternate energy sources is also something the countries are working on, and the investors are also keeping an eye on.
