Petrol Prices are Dropping: Ukraine's Attacks are Effective

Decline Trend in the Oil Market

In recent days, a notable price decline has been observed in oil markets. Brent crude fell to $63.82 per barrel with a decrease of 0.89% following the resumption of loadings at the important export hub Novorossiysk. U.S. West Texas Intermediate (WTI) is trading at around $59.50 with a decrease of 0.98%. While both types of oil had gained over 2% on Friday, this decline has raised concerns among investors.

Ukrainian Attacks Threaten Supply Security

Recently, the Ukrainian army's attacks on Russia's oil infrastructure have created uncertainty in the markets. These attacks include the bombing of the Ryazan oil refinery and assaults on the Novokuibyshevsk refinery. This situation threatens Russian oil supply security, drawing the attention of investors.

OPEC+ Production Increases and Global Sanctions

Fujitomi Securities analyst Toshitaka Tazawa states that investors are not only assessing the long-term effects of the tensions in Ukraine but are also shifting towards profit-taking after Friday's rise. Tazawa predicts that the production increases from OPEC+ countries have reinforced the perception of excess supply in the markets and that the WTI oil price will remain around $60 per barrel.

Impact of Sanctions and Growing Risks

The impacts of the sanctions imposed by Western countries on Russia and countries doing business with it are being closely monitored by investors. Particularly, the U.S. administration announced that it is working on regulations targeting countries with commercial relations with Russia. Additionally, Iran seizing an American tanker in the Strait of Hormuz has further increased the existing risks on the supply side.

Future Outlook

According to an analysis by ING, a significant surplus in oil supply is expected until 2026. However, considering the increasing attacks in Ukraine and the effects of international sanctions, fluctuations in the markets are likely to continue.