Oil slumps from 7-year high as Russia says withdraws some troops
Business

Oil slumps from 7-year high as Russia says withdraws some troops

By Jessica

New Delhi: Oil tumbled over 4% from a seven-year high on Tuesday after Russia said some of its military units were returning to their bases after exercises near Ukraine, a move that appeared to de-escalate tension between Moscow and the West.

It was not clear how many units were being withdrawn, and by what distance, after a build-up of an estimated 130,000 Russian troops. An earlier Interfax report on the troop movements had prompted oil to extend losses.

“We went from fearing that our worst fears would be realized to maybe there`s a diplomatic offramp here after all. That brings a lot of relief in terms of keeping supplies on the market,” said John Kilduff, partner at Again Capital in New York. “We can`t afford to lose a single barrel these days.”

Brent crude fell $3.99, or 4.1%, to $92.49 a barrel by 11:11 a.m. EST (1611 GMT). U.S. West Texas Intermediate (WTI) crude fell $4.28, or 4.5%, to $91.18 a barrel.

Both oil benchmarks hit their highest since September 2014 on Monday, with Brent touching $96.78 and WTI reaching $95.82. The price of Brent jumped 50% in 2021, while WTI soared around 60%, as a global recovery in demand from the COVID-19 pandemic strained supply.

The latest Russia-Ukraine development drew a cautious response from Ukraine and Britain, after days of U.S. and British warnings that Moscow might invade its neighbour at any time.

British Prime Minister Boris Johnson and U.S. President Joe Biden had agreed in a call on Monday there was a crucial window for diplomacy.

Investors are also watching talks between the United States and Iran on reviving Tehran`s nuclear deal with world powers, which could potentially allow for higher Iranian oil exports.

Russian Foreign Minister Sergei Lavrov spoke to his Iranian counterpart Hossein Amirabdollahian on Monday, and they noted a “tangible move forward” in reviving the Iran nuclear deal, Russia`s foreign ministry said.

Underlining the tight supply and demand balance, the latest weekly reports on U.S. inventories were expected to show another drop in crude stocks, which are at over three-year lows.

The first of this week`s two reports, from the American Petroleum Institute, is due at 4:30 p.m.

 

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