The ongoing conflict between Ukraine and Russia continues to influence the global political situation and commodity markets, including the oil market. The changing dynamics in the region and the involvement of international players shape not only the future of the conflict but also economic prospects.
The conflict has reached a crucial point. The pressure from Ukraine’s allies on President Volodymyr Zelensky to consider concessions is increasing. France and Germany are calling for negotiations, but Vladimir Putin is setting tough conditions, demanding recognition of Russian security interests and territorial gains. The situation is further complicated by North Korea’s support for Russia and ceasefire plans proposed by Turkey, which are causing controversy in Kyiv.
Despite this, the delivery of modern weapons to Ukraine, such as American ATACMS missiles, strengthens Kyiv’s defensive position, although simultaneously increasing the risk of escalating the conflict. Against this backdrop, the attitude of the West is changing – some allies increasingly see that a full military victory for Ukraine may be difficult to achieve.
Monday’s session started with the opening of WTI oil contracts around 66.77 USD. Then for several hours the “black gold” enjoyed increases to the levels of 67.30 USD. The rise in prices was contributed to by, among others, the intensification of war activities and damage to Ukrainian energy infrastructure during the largest Russian aerial attack in months. The decision by the Joe Biden administration to allow Ukraine to use American weapons against targets in Russia raises concerns about a potential disruption in Russian oil exports, which could further impact markets. However, these increases do not seem to be permanent. WTI oil fell below 67 USD a barrel again after a few hours.
This is partly due to the fact that the oil market itself is under considerable pressure. The decrease in demand in China – the largest importer of the commodity – and the forecasts of a supply surplus according to the International Energy Agency represent serious challenges. The financial problems of Russian refineries and a decrease in the number of active drilling platforms in the US to the lowest level since July also weigh on the market.
The war in Ukraine continues to play a crucial role in shaping oil prices and global geopolitical tensions. Though the situation in the market seems to stabilize, further escalations of the conflict could bring about more price fluctuations. In the face of economic and geopolitical uncertainty, oil-producing and consuming countries must be ready for dynamic changes. Concerns about oil oversupply and weak growth prospects in China negatively impact the market, while geopolitical tensions remain a significant factor of uncertainty.
Krzysztof Kamiński, Oanda TMS Brokers.
Source: https://ceo.com.pl/wojna-w-ukrainie-a-rynek-ropy-geopolityczne-napiecia-i-ich-wplyw-na-ceny-surowcow-49124
