© Reuters.
By Gina Lee
Investing.com – Oil was down on Friday morning in Asia, set for their biggest weekly drops since November 2021 but clawing back some losses. Market volatility also continued over concerns about more sanctions on Russian oil versus efforts to increase supply via other major producers.
Brent oil futures fell 0.73% to $108.53 by 12:39 AM ET (5:39 AM GMT) after falling 1.6% during the previous session. WTI futures was down 0.30% to $105.70 after a 2.5% drop on Thursday.
Brent futures were set for a weekly tumble of about 7% after hitting a 14-year high of $139.13, while WTI futures were headed for a drop of around 8% after hitting a high of $130.50.
The black liquid is wrapping up a volatile week, with the U.S. and U.K. looking to ban Russian oil supplies earlier in the week, then floating potential supply additions from Iran, Venezuela and the United Arab Emirates, and fighting intensifying in the Russian invasion of Ukraine.
However, oil eased after it looked like the European Union, which is heavily reliant on Russian supplies, would not join the U.S. and U.K.’s embargo.
Russia is the second largest crude exporter globally behind Saudi Arabia, and “the oil market is not prepared to face such a supply shock as inventories stand at a multi-year low level,” ANZ Research analysts said in a report.
In the near term, supply gaps are unlikely to be filled by extra output from members of the Organization of the Petroleum Exporting Countries and allies (OPEC+) given that Russia is a member of the cartel, Commonwealth Bank analyst Vivek Dhar told Reuters.
“They’re really tied politically by the structure,” he added.
Other OPEC+ producers, including Angola and Nigeria, have struggled to hit their production targets. This further limits OPEC+’s ability to offset the loss of Russian crude.
Brent futures will average $110 in the second and third quarters of 2022 but could climb as high as $150 in the short term, Commonwealth Bank predicts. However, “all of it is very uncertain. It’s been very difficult to come out with a view,” Dhar said.
Source: Investing.com
