Oil prices eased on Tuesday as global stock markets tumbled, as investors pushed profits from the previous day’s rally to a seven-year high and continued concerns that Russia could invade Ukraine, disrupting energy supply and causing limited losses.
Russia is one of the world’s largest producers of oil and gas, and fears that it might invade Ukraine have spurred a surge in oil to $100 a barrel, a level not seen since 2014.
Brent crude futures were down 44 cents, or 0.5%, to $96.04 a barrel as of 0540 GMT, after rising $2.04 on Monday.
West Texas Intermediate (WTI) crude was down 52 cents, or 0.5%, to $94.94 after gaining $2.36 the previous day.
Both indicators hit their highest levels since September 2014 on Monday, with Brent hitting $96.78 and WTI $95.82.
Investors are in a wait-and-see mode amid the uncertainty regarding the US-Iran nuclear talks, as well as the conflict between Russia and Ukraine.
Portfolio managers are still optimistic about the oil outlook. But prices rose more than 30% in less than three months, and rising inflation and growing concerns about interest rates prompted fund managers to make some profits last week.
Investors are also watching the talks between the US and Iran.
A correction could be seen in oil markets if the Iran-US nuclear deal is accepted or if global stocks fall further on inflation concerns and tighter monetary policies from central banks.
Asian stock indicators fell on Tuesday as investors ponder the possible consequences of Russia’s invasion of Ukraine.
Ukrainian President Volodymyr Zelenskiy called on the Ukrainians to take a national stance on February 16, which was voiced by the western media as the start date of a possible Russian invasion.
Meanwhile, the historic upward revision in oil demand noted in the International Energy Agency’s monthly report points to a tighter global market than previously anticipated.
In light of all this, prices are likely to reach $125 a barrel as early as the second quarter of this year, as the Organization of the Petroleum Exporting Countries and allied producers’ production shortages and reserve capacity concerns keep the oil market tight.