The price of oil “whipsawed from a peak of $128 to as low as $98” in a fortnight as the market gyrated between Western sanctions on Russia, China’s Covid-19 surge and uncertainty about new supply from US shale drillers and Opec, says The Economist. Brent crude traded at around $119 a barrel on Wednesday, up by more than 50% this year.
The pullback from recent highs suggests some “speculative froth has blown off” the market, says Liam Halligan in The Daily Telegraph. But note also that “Western energy sanctions, while extremely serious, are not quite as tight as suggested by the belligerent political rhetoric”. It may be “the end of the year at the earliest” before Russian crude stops flowing to the UK and the EU.
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US shale producers may raise output, but Western oil producers are reluctant to invest. “The US has been looking for other sources of supply, including possible barrels from Venezuela, which has been under sanctions,” says Patti Domm for CNBC. A nuclear deal with Iran could bring one million barrels per day back onto markets, “but those talks have bogged down in recent weeks”.
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