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Price
crude oil
The world weakened in early trading on Friday (19/12) due to the positive prospect of reaching a peace agreement
Russia
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Ukraine
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This positive signal pressured prices and masked concerns about supply disruptions due to the United States (US) blockade plan on Venezuelan tankers.
Quote
Reuters,
The price of Brent oil futures contracts fell 9 cents or 0.2 percent to US$59.73 per barrel.Meanwhile, US West Texas Intermediate (WTI) crude oil fell 16 cents or 0.3 percent to US$55.99 per barrel, with both benchmarks recording a decline of more than 2 percent on a weekly basis.
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US President Donald Trump on Thursday (18/12), said talks to end the war in Ukraine were getting closer and the goal was positive.This statement was made ahead of a meeting between officials from Uncle Sam’s country and Russia which is scheduled to take place this weekend.
Optimism about Ukraine’s potential for peace is seen as reducing market concerns about global supply risks.The market assesses the possibility that easing sanctions against Russia could reopen oil supplies to the international market.
On the other hand, uncertainty still surrounds the United States’ planned blockade of Venezuelan oil tankers which are on the sanctions list.It is not yet clear how Washington will enforce the policy, considering that Venezuela only accounts for about 1 percent of global oil supplies.
Last week, the United States took the unprecedented step of seizing a Venezuelan oil tanker via the Coast Guard.However, analysts assess that the impact of this policy on global supply is relatively limited.
IG analyst, Tony Sycamore, assesses that the combination of uncertainty about sanctions enforcement and optimism about Ukraine’s peace is suppressing the geopolitical risk premium.
“Uncertainty about enforcing the blockade and optimism about a potential US-led Ukraine peace deal eased global supply concerns,” he said.
Some analysts say further steps targeting Russian oil exports could potentially have a bigger impact on the market than the blockade of Venezuelan tankers.Russia is one of the world’s largest oil producers.
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