When problems in Crimea started escalating, crude oil was expected to get affected; however, now that the situation is clear, it does not seem to have any impact. The latest is that Brent crude traded near a six-week low as the situation warrants regular crude supply, particularly after the peaceful secession of Crimea from Ukraine to Russia.
Like Brent, WTI slid 3.6 percent last week which is the highest in more than two months. This happened as a mammoth increase in the US oil supplies was seen. ForexMinute had earlier reported that increasing production of crude from the US is a major reason that WTI has been fairing low for more than a year now.
The latest report is that the US oil supplies climbed to 370 million barrels which is the highest since December 2013. Overall the crude oil continued to ease today early in the morning trade in the Asian market. The decline was seen as an outcome of Monday’s fall as tensions in the Ukraine subsided and the vote in Crimea went off without a hitch.
Earlier, indications were that the situation in Ukraine may deteriorate and that may affect oil supplies; however, when assurance came from Russia that there won’t be any abruption in the crude supplies, the prices normalized and even slipped further. Brent North Sea crude slid $1.97 to $106.24 a barrel in London trade, its lowest level since early February.
Observers Suspect the Logic and Rational of Economic Sanctions on Russia
However, later on Brent North Sea recovered on Tuesday morning and added 26 cents to reach 106.51. Though the US and EU have imposed penalties on Russian and Ukrainian officials linked to efforts to wrest Crimea from Ukraine, the impacts are yet to be seen. Particularly, when Europe depends a lot on the Russian crude, it looks difficult if this is a wise decision.
Suspicion over the decision to impose economic restrictions is coming up; for instance, the extreme dependency of Europe on the Russian oil tells that this is not going to last long. Also, Russia which depends a lot on oil export cannot afford the penalties and would work out to solve the issue amiably.
Thus, logic and rational are not behind the economic restrictions on Russia and the deal is going to fail. Nonetheless, the European Union and the United States’ sanctions on top Russians and Ukrainians may not bear the fruits as are expected.
To contact the reporter of this story: Jonathan Millet at firstname.lastname@example.org