The key factors that affect the crude oil price fluctuation are changes in policy, supply, politics, the perceived risk regarding market disruptions, consumer demand, and many more. Crude oil prices can vary dramatically, from a downtrend in 2020 to far more about $90 per barrel in less than two years. Growth in the economy can drive up prices for crude oil, whereas downturns tend to drop oil prices and reduce the requirement. OPEC+ is a global association of crude oil suppliers that acts as an intermediary trade restriction for its members to affect global supply. It also has a significant role in oil prices declining in terms of a critical supplier of crude oil.
It has been analyzed that Crude oil prices have dropped from $139 per barrel, and it was the worst in 14 years, to slightly over $100 per barrel. The price of oil per barrel today is the lowest of all that has been witnessed in history. Brent crude surged to $102.7 per barrel, up 32% against $78.11 per barrel at the start of the year. Now the question is, why is crude oil down today? Let’s have a look at that.
Why crude oil prices are falling today?
Lately, it has been reported that the cases of COVID-19 have increased drastically in China. Due to this, the government has imposed new lockdown rules and regulations. And it has hugely impacted the oil fall as China is the major importer of crude oil. Oil prices have been steadily rising since the start of the year because of the Russia-Ukraine issue. Still, suggestions and various reports indicate that the new nuclear deal associated with Iran could enhance global crude oil sources, which has helped to calm them. However, new restrictions have been imposed in China to reduce the risk of transmission of Covid-19 infestations, which have reached a two-year peak. It has mainly contributed to the oil price declining.
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Separately, it has been reported that Russia, the US, and Iran are in negotiations to resurrect a 2015 nuclear covenant have alleviated supply fears in the worldwide market. Iran’s Government is willing to curb its nuclear program for relief from financial sanctions that constrain Iranian oil shipments under the 2015 agreement. Russia had demanded assurances that western permits on the nation would not affect the nation’s economic relations with Iran, but talks had stagnated.
Nevertheless, Sergei Lavrov, Russian Foreign Minister, stated that the nation had received formal assurances that the government would be able to continue working on the accord without interruption. According to experts, crude oil production in Iran might expand by 1.5 million oil barrels per day in a couple of months if restrictions on oil exports are lifted.
Since the EU banned seven Russian banking institutions from using the SWIFT financial transaction communication system, making it hard for Russian oil shipments to find customers, Russia has started providing inexpensive crude oil cargoes. Another significant factor regarding oil prices declining. Some purchasers have also determined against buying Russian crude due to the risk of damaging their reputation if they do so during Russia’s attack on Ukraine.
