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In the midst of the Russian, Ukraine crisis, there are huge ramifications that affect us all in the global market. Energy is a critically important export. Russian oil and gas exports make up a fifth of Russia’s economy and half of its earnings from exports. The country is the European Union’s biggest oil trading partner, according to the latest data from Eurostat. Russia also ranks 5th in the world for oil consumption, accounting for about 3.7% of the world’s total consumption of 97,103,871 barrels per day. They are also ranked 3rd in oil production, which is the most important factor when it comes to costs, sitting close to the oil powerhouses of United States and Saudi Arabia. They are also some way ahead of China, who sits in 4th lagging behind Russia by a wide margin of 6 million barrels per day (Fig.1).
As you can imagine any disruption to any country in this list on a normal day, would trigger a price movement. So a war and subsequent sanctions on a country who controls so much consumption and production of the precious liquid would make more than a ripple.
Latest Price Action
Over the last few days, we have seen Oil prices finished higher each closing day, a sharp increase over night of 9.72% to start today’s session at $106.33 (Fig.2).
WTI Oil followed suit and had a jump of 11.5%, a sharp increase over night to start today’s session at $106.75 (Fig.3).
The Wall Street Journal reported that the U.S. and other major oil-consuming countries were weighing the release of 70 million barrels of oil from emergency stockpiles in response to surging crude prices. This is to try to stabilize the oil prices and make up the supply that Russia would normally deliver pre sanctions.
It’s important to tread carefully when trading assets such as these commodities, which are driven by Geopolitics, unforeseen supply and demand levels and corporate institutions around the world who have their own agendas in mind when thinking of their bottom line. Profits.
Sources: QUARTZ, worldometers.info, The Wall Street Journal, Tradingview.
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