Progress in the peace talks between Russia and Ukraine lowers the price of oil

By: Dr. Franyi Sarmiento, PhD., Inspenet, March 17, 2022.

The international price of oil closes a new day down due to the advances in the peace talks between Russia and Ukraine. The price of WTI oil ended the day on March 16 with a decrease of 1.5% to close at USD 95.04 a barrel.

WTI continues to lose ground due to progress in the peace talks between Russia and Ukraine and due to the increase in crude oil inventories in the United States.

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Oil contracts have been in constant fluctuations for more than two weeks and reached their peak on March 8, when they settled at USD 123.70 a barrel. The price escalation began after Russia’s invasion of Ukraine on February 24, and gained strength with the sanctions that the United States and other countries imposed on Russia, a country that is one of the largest oil and gas producers in the world. The sanctions have disrupted the trade of some five million barrels a day of oil from Russia.

Several factors are driving the turnaround in oil prices, including hopes for a peace deal between Russia and Ukraine. Another factor is the dim signs of progress between the United States and Iran in resurrecting a 2015 deal, which would allow Iran to export oil.

In addition, Chinese demand is expected to slow due to a rise in coronavirus cases in that country. Although the latest figures show a lower number of new Covid cases in China.

Another factor is the growth of US inventories by 4.3 million barrels, when they were expected to fall.

For its part, the S&P 500 index of the New York Stock Exchange closed higher on March 16, after a day shaken by the rise in interest rates by the United States Federal Reserve. The Federal Reserve announced a quarter point increase in its overnight benchmark interest rate, just as the market expected. But the projection that its interest rate will be between 1.75% and 2% by the end of the year has surprised by its harshness. The S&P 500 was up 96.45 points, or 2.26%, near the close, while the Nasdaq gained 491.50 points, or 3.80%. The Dow Jones Industrial Average rose 521.10 points, or 1.55%.

Source: Primicias.ec: https://www.primicias.ec/noticias/economia/petroleo-baja-conversaciones-rusia-ukrania/