Hopes for cheaper oil are dying out. More and more risk factors

Russia's attack on Ukraine, new coronavirus outbreaks and local lockdown in China, guerrilla attacks on a Saudi refinery - it seems that all these factors may have recently influenced crude oil prices and fluctuations in this market.

The WTI crude oil futures today jumped 3 percent to $ 108 a barrel, and the Brent barrel price is above $ 111.

The EU announces an embargo on oil from Russia

The raw material seems to be more expensive in the third consecutive session, and at the beginning of the new week the rate hikes may be related mainly to information from the front, where there are no clear signs of de-escalation. This morning, Ukraine announced that its troops would not surrender in Mariupol.

There has also been unofficial information that the European Union may join the US and impose an embargo on Russian oil imports. As if all this was not enough, it also happened attacks on the Saudi Aramco refineries by the Houthi rebels. This may have limited production.

Possible deficit: 700 thousand. barrels a day

OPEC + exceeded its production target by more than 1 million barrels a day in February, but the market is still preparing for serious disruptions in the supply of crude oil from Russia. Last week, the IEA said there could be a supply deficit of 700 in the second quarter. barrels a day. Western sanctions imposed on Moscow and the reluctance of buyers may lead to a drop in Russian oil supplies by 3 million barrels a day since April.

Admittedly, only a few days ago, oil prices fell from USD 130 to USD 100 per barrel, the situation in this market may still be tense and volatility even more significant than before. The risk factors seem to magnify, not limit.