Oil Prices is approaching an all-time high with the continuing war in Ukraine. US announcement about sanctions against Russian oil and Russian pre-condition for nuclear deal are the main roots of the rise.
World market is expecting the Iranian oil with nuclear deal in sight. Following the procrastination of the prospective restoration of Iranian petroleum to international markets, oil prices are up to highest level 14 years. Meanwhile, Washington and its European partners are considering prohibiting Russian oil in the market.
In recent days, talks to resurrect nuclear agreement between Iran and Western powers have been put in a limbo. It comes as Russia demanded a written assurance from the United States that the sanctions would not harm its commerce with Iran. Russian faces harsh sanction a result of its military offensive against Ukraine. Insiders argue that Beijing has also made similar requirements.
American Secretary of State rejected the Russian demands in assertive remarks yesterday. Antony Blinken asserted that Ukraine war and the subsequent sanctions on Russia is one thing and nuclear negotiations with Iran is other.
Blinken observed that Washington and its European allies are considering prohibiting Russian oil sales in the world market. Pushing on with their special prohibition, the US administration is cooperating with important Congressional offices.
In the meantime, Brent has seen a 9.9% rise, $11.67, reaching $129.78 a barrel on Monday. West Texas Intermediate (WTI) oil in the United States increased by 9.4%, $10.83, rising to over $126.51 a barrel. Both futures are on pace for their greatest daily percentage gains 22 months as a result of the increase.
Both indexes surged to highest levels in 14 years on Sunday, with Brent and WTI at $139.13 and $130.50 consecutively. Brent and WTI reached their all-time highs in July 2008, both recording over $147.
Oil Prices; Nuclear Deal against Ukraine War
“Iran was the only real bearish factor hanging over the market but if now the Iranian deal gets delayed, we could get to tank bottoms a lot quicker especially if Russian barrels remain off the market for long,” these remarks by an American energy analyst indicates the formation of a duality in oil market.
At one side is Russian oil which is gradually off the market following sanctions. The other side bears the burden on a potential nuclear deal with Iran the opens Iranian oil to world market. The west hopes to use the Iranian capacity to control the prices in the coming weeks.
Russia, on the other hand, means to lessen the international pressure by keeping the oil prices high. Foiling the efforts to reach a deal with Iran has been one of the strategies Moscow employed in recent days.
JP Morgan experts, American Investment company, believe that the oil prices have the capacity to rise over $185 in 2022. The head of S&P Global also stressed that “the idea was not to sanction oil and gas because of their essential nature, but oil is getting sanctioned by private actors not wanting to pick it up or ports not wanting to receive it and the longer this goes on the more supply chains are going to buckle.”
Russian oil exports are over 7 million barrels per day and processed products, accounting for about 7% of world production. Kazakhstan’s oil shipments from ports in Russia have also faced interruption in several ways.
If majority of Russia’s oil shipments are halted, a 5 million-barrel shortage might be the outcome. The result may be a $200 record of a barrel. Iran’s oil, in the best scenario, needs months to fill part of the gap.