Oil prices continue to fluctuate on Russia-Ukraine tensions, US inventories

March 16, 2023 (MLN): Oil prices continue to be volatile due to several factors, including the ongoing conflict between Russia and Ukraine and a surprising increase in U.S. inventories.

On Wednesday, global benchmark Brent traded in a range of $97.55 to $103.70 before settling at $98.02, down $1.89 a barrel, or 1.9%. Meanwhile, U.S. West Texas Intermediate (WTI) crude ended down $1.40, or 1.5%, at $95.04 a barrel.

Last week, Brent briefly surpassed $139 a barrel on concerns about extended disruption to Russian supply, but it has since fallen by more than $40. Some analysts have warned that this reflects too much optimism that the war between Russia and Ukraine will end soon.

The United States and other nations have imposed heavy sanctions on Russia since its invasion of Ukraine more than two weeks ago, disrupting Russia's oil trade of more than 4 to 5 million barrels of crude daily. Brent staged a 28% rally in six days before dropping 24% over the next six sessions.

Several factors have contributed to the volatility in oil prices, including the prospects of a Russia-Ukraine peace agreement and signs of progress between the United States and Iran to resurrect a 2015 deal that would allow Iran to export oil if it agrees to limit its nuclear ambitions.

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