Price Performance Indicators

• In a week (28/2 - 4/3) the price of ICDX’s crude oil rose more than 23 percent.   
• The highest volatility reached 7.84 percent.   

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Market Review

The price of crude oil at the close of the first week of March 2022 showed a quite drastic spike, rising by more than 20% to $115 per barrel compared to the price at the beginning of the week. The increase also pushed up the price of crude oil derivative products such as heating oil (25.32%) and gasoline (26.71%). Other energy commodities, such as natural gas, also jumped by 13.95 percent. One of the main issues that has made energy commodity prices soar is the East European crisis between Ukraine and Russia, which has the potential to disrupt energy supply chains in the global market because Russia is one of the world's largest oil and gas producers. 

Adding more pressure on the supply side, at a regular meeting, which took place on March 2, OPEC and its allies decided to maintain their agreed production commitments, which is to increase production by 400,000 bpd per month. In fact, OPEC+ emphasized that it would not add more supply to the market despite the potential for supply cuts from Russia with the planned import embargo by the US and its allies.

Meanwhile, the US and 30 other countries that are members of the International Energy Agency (IEA) announced (2/3) plans to collectively release 60 million barrels of oil from the strategic reserves, where the US itself committed to releasing 30 million barrels of oil from the total that mentioned. The plan, which will be taken by the 31 countries that represent major oil-importing countries, aims to stabilize energy markets and seek to curb the surge in global oil prices, which currently have exceeded the level of $100 per barrel.

Market View

Ukraine Crisis Peaks, Russia Potentially Embargoed

In his latest attempt to denounce Russia's invasion of Ukraine, the US and Europe are exploring the potential to impose a ban on oil imports from Russia, US Secretary of State Anthony Blinken said on Sunday (6/3). However, this embargo plan received open opposition from Germany (7/3), which also indicated the potential for the US to carry out the import embargo without the participation of its European allies. On the same day, Russia made threats to stop the main gas pipeline that supplies natural gas to Europe and the potential for oil prices to soar to levels of more than $300 per barrel if the embargo was implemented. The US president himself has not yet issued an official statement regarding further plans regarding the implementation of the embargo. This makes the market keep a close eye on the latest developments related to the crisis in Ukraine, as any changes could affect the direction of further movement of energy commodity prices, including crude oil. 

Iran's Nuclear Negotiations Still Overshadowed by Uncertainty

The continuation of the meeting related to Iran's nuclear negotiations that have been going on for more than 10 months again met with uncertainty after demands from Russia (6/3) asking for assurances from the US that the sanctions that will be imposed relating to the invasion of Ukraine will not include the trade between Russia and Iran. On the same day, China also reportedly made similar demands, which made the direction of nuclear negotiations even more complicated. The market is also watching the development of the nuclear negotiations because if the agreement is successful, the market has the potential to receive additional supplies from Iran of more than one million bpd of oil, or about 1% of global supply.

WEEKLY ECONOMIC DATA & EVENTS CALENDAR

Source: ICDX Research