Oil prices continue to weaken after a week of wild moves. The catalyst
driving oil still comes from the prospect of additional supplies from Iran
returning to the market.
This outweighs concerns over a possible Russian invasion of Ukraine, which
could disrupt global supplies.
Friday (18/2) at 09.00 WIB, the price of Brent crude oil futures for
delivery in April 2022 fell 68 cents or 0.7% to US$ 92.29 per barrel. This
extended the 1.9% decline from the previous session.
The price of West Texas Intermediate (WTI) crude oil for delivery in March
2022 fell 67 cents, or 0.7%, to US$ 91.09 per barrel, after sliding 2% in
the previous session.
Both benchmark contracts were headed for their first weekly declines in nine
weeks after hitting their highest levels since September 2014.
The main sentiment dragging on oil came from a deal formed to revive Iran's
2015 nuclear deal with the West.
Diplomats say the draft deal outlines a sequence of steps that will
eventually lead to oil sanctions relief. That would bring about 1 million
bpd of oil back to the market, but the timing is unclear.
"Nevertheless, the specter of a potential 1 million bpd hit the oil market
is putting Brent crude prices under pressure," ANZ Research analysts said in
a note.
Analysts don't expect prices to drop much anytime soon, even with the
prospect of more Iranian oil returning, with the Organization of the
Petroleum Exporting Countries and its allies, collectively called OPEC+,
struggling to meet their production targets.
"Oil markets are vulnerable to supply disruptions given global oil
stockpiles near seven-year lows and as OPEC+ spare capacity is being
questioned given disappointing OPEC+ supply growth," Commonwealth Bank (CBA)
analyst Vivek Dhar said in a note.
With oil demand also recovering as air travel and road traffic picks up, the
CBA sees Brent holding in the $90 to $100 per barrel range in the short term
and hitting $100 "quite easy" if tensions escalate between Russia and
Ukraine.
Earlier, US President Joe Biden would host talks on the Ukraine crisis with
leaders from Canada, France, Germany, Italy, Poland, Romania, the UK, the
European Union and NATO, Canadian Prime Minister Justin Trudeau's office
said.
