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Experts named the reasons for the fall in the oil market


December, 07 2022
watermark Economic news

World prices have already dropped to the levels of early January: on Wednesday, Brent oil is trading in the area below the level of $78 per barrel. WTI oil dropped today to the level of $72.77. The main pressure on the exchange rate of oil quotes is exerted by increasing fears of a recession in the global economy and a decline in oil demand in 2023.


Over the past three sessions, both Brent and WTI have lost more than 9% in price, despite the easing of quarantine restrictions in China and the entry into force of the European embargo on Russian oil supplies.


Analysts note that expectations of a sharp reduction in oil supplies from Russia after the start of the embargo did not materialize into reality. The fact is that probably, expectations of a sharp reduction in supplies after the embargo were already embedded in the prices. Moreover, on Sunday OPEC+ decided not to change the production quota, and Russian companies managed to prepare for the embargo, including by acquiring a tanker fleet.


Recall that since December 5, the European Union has stopped accepting Russian oil transported by sea. In addition, the G7 countries, Australia and the EU have imposed a price limit on such oil at $60 per barrel. In response, Russia announced that it was considering possible mechanisms to prohibit the use of the price ceiling for Russian oil supplies.


The imposed sanctions have already led to a traffic jam of oil tankers off the coast of Turkey due to Ankara's demands to provide insurance data. Potentially, this delay could lead to an increase in the price of oil on expectations of a deficit.


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Foreign exchange trading carries a high risk of losing money due to leverage and may not be suitable for all investors. Before deciding to invest your money, you should carefully consider all the features associated with Forex, as well as your investment objectives, level of experience, and risk tolerance.