Oil prices tumbled more than 7% to their lowest in almost three weeks on Tuesday as supply disruption fears eased and surging Covid-19 cases in China spurred demand concerns.
Brent futures fell $7.89, or 7.4%, to $99.01 a barrel by 11:51 AM EDT (1551 GMT), while US West Texas Intermediate (WTI) crude dropped $8.11, or 7.9%, to $94.90 a barrel.
Brent fell as low as $97.44 and WTI hit $93.54, their lowest since February 25.
Both contracts moved the closest to oversold territory since December. They had been in overbought conditions as recently as early March, when the benchmarks reached 14-year highs after Russia’s invasion of Ukraine. Since then, Brent has lost about $40 and WTI has fallen by more than $30.
The steep decline on Tuesday followed a statement from Russian Foreign Minister Sergei Lavrov, saying that Moscow is in favour of the 2015 Iran nuclear deal resuming as soon as possible.
The talks to revive the nuclear accord, which would lead to sanctions on Iran’s oil sector being lifted and allow Tehran to resume crude exports, had recently stalled because of Russian demands.
At the same time, a Ukrainian negotiator said on Tuesday that talks with Russia over a ceasefire and withdrawal of Russian troops from Ukraine are ongoing.
In the fallout from Russia’s invasion, which it calls a “special operation,” Western sanctions against Russia have failed to deter China and India from buying Russian crude.
Tuesday’s steep price decline surprised several analysts.
“Reports of promising talks (between Russia and Ukraine) are to be welcomed,” said a research note from Kpler.
Published in The Express Tribune, March 16th, 2022.
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