Oil price: will it remain volatile and at high levels?

The oil price is being driven up by supply bottlenecks
lembargo difficult for EU
Biden administration looking for alternatives

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The price of oil will not budge from its high level, having been pushed up by global supply pressures before the war in Ukraine, according to a CNBC report. According to the portal, however, there could also be massive swings in both directions. There is talk of a new volatility, of massive fluctuations within short periods of time that could become the new normal.

At the time of the Russian invasion of Ukraine, the oil price was already at a high level due to increasing demand. The outage of Russian oil continues to put pressure on the market. Experts such as RBC analyst Helima Croft believe it is unlikely that the Russian invasion of Ukraine will soon end and that oil prices will collapse as a result. She stressed to CNBC that she remained optimistic about l, as there would be no quick end to the war in Ukraine and Putin’s willingness to negotiate was unrealistic. Daniel Pickering, Chief Investment Officer of Pickering Energy Partners, also told CNBC that the market will continue to react to fears of a lack of Russian oil supplies and that the oil price rally is not yet over.

lembargo: Possible boycott of Russian oil and gas

Concerns about supply are further fueled by a recently discussed possible EU import ban on Russian oil and gas. According to industry experts, the pressure on European countries to agree to such an embargo is increasing. US President Biden’s call for a boycott of Russian gas and oil has so far met with resistance in the EU and especially in Germany, while the United States and Great Britain have already stopped oil supplies. The EU’s dependence on Russian oil and gas means industry experts like Croft remain skeptical that the European countries, above all Germany, will agree to the embargo.

Supply bottlenecks in the USA

The boycott of Russian oil is not without consequences for Americans either. “There are renewed concerns on the market that we could lose more Russian oil,” John Kilduff, a partner at Again Capital, told Reuters in mid-March increase, will not serve the demand, according to CNBC. The Biden administration is currently looking for alternative suppliers to improve the global supply situation. Even relaunching ties with blacklisted states like Venezuela and Iran is under consideration, Daniel Yergin, IHS Markit, told the New York Times.

Further negative factors for the oil market

In Saudi Arabia, Houthi rebels from Yemen have attacked plants belonging to the Saudi Arabian group Aramco in the past few days. This has recently proved to be an additional burden on the oil market. According to the German Press Agency, the rebels said they had fired rockets and drones at other “important facilities” in the capital, Riyadh, in addition to a refinery.

Experts like John Kilduff also point to the strained relations between Saudi Arabia and the Biden administration of late, regardless of the recent rebel attacks. “Saudi Arabia’s refusal to increase supply is exacerbating the pricing problem for consumers around the world,” Kilduff told CNBC. Saudi Arabia, a leading member of OPEC+ and a partner with Russia, has not yet responded to the latest high-level talks with Britain and the US. At its last meeting, OPEC+ also did not comment on a possible increase in production, which can have a massive impact on prices.

For the oil price, the current mixed situation is therefore likely to mean continued high volatility. A significant fall in prices should not be expected for the time being.

Editorial office finanzen.net

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