Oil price reacts to likely US-Russia summit and Iran nuclear deal

/ Oil & Gas / Monday, 21 February 2022 09:15

Oil prices dropped on the hopes of a favourable summit between US President Joe Biden and Russia's Vladimir Putin on the Ukraine crisis and on prospects of a nuclear deal between Iran and world powers in the coming weeks.

French President Emmanuel Macron has pitched to both leaders a summit over "security and strategic stability in Europe." As per the White House reports, Biden had accepted the meeting "in principle" but only "if an invasion hasn't happened."

Brent crude futures fell 73 cents or 0.8% to $92.81 after having jumped more $1 than to $95.00 in early trade, its highest level since Wednesday.

US West Texas Intermediate (WTI) crude futures similarly fell 52 cents or 0.6% to $90.55 a barrel after having hit a high of $92.93.

Oil markets have witnessed uncertainty in over a month on the tension built up between Russia and the West over Ukraine. Any flare up means that crude supplies would be disrupted and thus pushing the oil price to $100 a barrel. However, the possibility of more than 1 million barrels a day of Iranian crude returning to the market has eased some sentiments.

Analysts said the market remained tight, and any addition of oil would help, but prices would remain volatile in the near term as Iranian crude would only likely return later this year.

Meanwhile, Russia faces the danger of being cut off from international financial markets and denied access to major exports needed to modernise its economy if it invaded Ukraine.

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