Direct Market Facts

A broad range risk asset setback has caused crude oil prices to fall globally on Monday. The asset setback also caused European and American stocks, as well as fragile currencies and cryptocurrencies in their respective markets, to fall correspondingly. Near-month contracts are presently trading at mid-$83.00/barrel, falling by about $1.50 West Texas Intermediate (WTI), despite being at the height of $86.00/barrel at the early hours of the trading session.

Financial support for the commodity at $83.00 is now active and holding out. However, there are speculations that trading under this point may ignite a rapid fall back towards $80.00/barrel. 

Observers and traders in the oil sector have severally pointed their fingers at the twin effect of the Federal Reserve’s pending stiff monetary policies, as everyone concerned looks forward to this week’s meeting and worries over the political tensions in Eastern Europe as the reason for the oil market slide. Some other benchmark assets like the USD, CHF, JPY, and bonds were trading well as they largely saw good market demands. 

Some of these factors were ascribed to the strength of the US dollar’s weight on crude oil prices. A strong US dollar crude sold in dollars is a lot expensive for traders holding other fiat currencies, therefore, reducing the demand for crude oil.

Eastern Crises

Some analysts have been saying further that although the general downturn in the financial market has serious effects on crude oil prices, the escalating political atmosphere in Europe between Ukraine and Russia, and that of the Middle East as Saudi Arabia, Iran, and the UAE engage in a proxy war in Yemen, are a major source of high price in crude oil prices. 

It is unknown if a NATO sanction on Russia in retaliation in the event of an invasion of Ukraine will affect the country’s over 11 million barrels of crude oil per day. 

Apart from crude oil, Russia is the large supplier of gas in Europe, and a lot of energy and economic power depends on Russia’s gas. It is the main reason why countries would rather prefer a political solution to the Russian-Ukraine crisis rather than a military confrontation. However, Russia has had a huge military movement amassing troops at the border with Ukraine on Monday, sparking fears of invasion while the US and the UK ordered their diplomats out of Ukraine.

In the Middle East, crude oil production has been seriously hampered by continuous terrorist attacks and the long-drawn Yemenis war.

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