Oil prices fell by about 2.5%, at the end of trading today, Tuesday, June 27 (2023), after it had started with a rise supported by concerns about political instability in Russia and potential supply disruptions, as well as hopes for a recovery in US demand before the summer season.
The political situation in Moscow stabilized after the armed mercenaries withdrew from the city of Rostov in southern Russia, under an agreement that stopped their progress towards the capital, but fears of renewed clashes and their impact on Russian oil supplies still exist, according to a report published by Reuters.
And oil prices made slow progress during yesterday’s trading, Monday, as Brent crude avoided falling below $ 74 at the end of today’s transactions, as it rose after 3 consecutive sessions of continuous losses, according to information monitored by the specialized energy platform.
Oil prices today
At the end of trading, Brent crude futures – for August 2023 delivery – fell, by 2.6%, to record the price of a barrel of oil, about $72.26 per barrel.
US West Texas Intermediate crude futures – August 2023 delivery – also fell by 2.4%, to $67.70 a barrel, according to figures seen by the specialized energy platform.
Yesterday, Monday, June 26, Brent and West Texas Intermediate crude rose by 0.5% and 0.3%, respectively, after several sessions in which oil prices witnessed losses, which investors considered an extension of last week’s losses.
Questions about the tightening of Russian President Vladimir Putin’s grip on the levers of power in Moscow raise some concerns about the prospects for disruption to oil supplies from Moscow, in the event that the rebels manage to control matters there.
These concerns come despite the announcement of the withdrawal of the armed mercenary group led by “Wagner”, and despite the continued loading of Russian oil supplies in the same quantities and at the same predetermined dates.
Oil price analysis
ANZ analysts said that the events of last weekend in Moscow made it difficult to assume that traders are still reassured that Russian oil supplies will continue to be directed to the international market to the same extent.
They added, in a note, that this is likely to lead to the application of a risk premium on oil prices, amid risks of more civil unrest in Moscow, as monitored by the specialized energy platform.
Fears of a decline in oil supply in the global market due to the events in Russia come at a time when investors fear a decline in supply after Saudi Arabia announced its pledge to voluntarily cut oil production.
In turn, BMI Research analysts said that the additional unilateral cut of one million barrels per day by Saudi Arabia, which is scheduled to take effect in July, along with seasonally stronger demand, would help to actually tighten the market in third quarter of this year.
However, analysts warned at the same time that the fragile market sentiment is likely to limit any rise in oil prices, especially since it had fallen by about 3.6% over the past week, due to fears of rising interest rates by the US Federal Reserve.
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