International Oil Prices Plunge Over 7% Amid Multiple Adverse Factors... "Declining After Peak" (Comprehensive)

Rising US-Russia Tensions Raise Concerns Over European Vaccine Supply
Dollar and Gold Surge as Safe-Haven Assets Expand Declines
Demand Decline Amid Green Policies and Electric Vehicle Issues

[Image source=AP Yonhap News]

[Asia Economy Reporter Hyunwoo Lee] International oil prices plunged sharply due to overlapping negative factors, including concerns over increased production by Russia amid escalating tensions between the United States and Russia, and demand reduction worries caused by delays in vaccine distribution in Europe. The surge in demand for safe-haven assets pressured oil prices down, as U.S. Treasury bonds, the dollar, and gold prices rose. Experts predict that international oil prices, which had been soaring, will peak and enter a downward trend due to the global green policy stance, the expected decrease in oil demand from increased electric vehicle production, and anticipated supply expansion by Russia.

According to foreign media such as CNBC, on the 18th (local time), the price of West Texas Intermediate (WTI) crude oil on the New York Mercantile Exchange (NYMEX) closed at $60.06 per barrel, down $4.57 (7.07%) from the previous session. During the session, WTI recorded $59.24, falling below $60 and marking the lowest price since early this month. Brent crude oil from the North Sea, traded on the London ICE Futures Exchange, which had surpassed the $70 mark after a rally until last week, also plunged $4.72 (6.9%) from the previous day, trading at $63.28 per barrel.

The most direct cause affecting international oil prices was the verbal confrontation between the leaders of the U.S. and Russia. According to Russia's TASS news agency, Russian President Vladimir Putin said in an interview with state TV on the same day, "I would like to propose an online live debate to President Joe Biden," criticizing the Biden administration's additional sanctions against Russia announced the day before.

The previous day, the Biden administration concluded that the Russian government was behind the attempted poisoning of Russian opposition leader Alexei Navalny and announced additional sanctions against seven senior Russian officials, five research institutes and security agencies, and 14 companies. President Biden raised tensions between the two countries by responding "Yes" to a reporter's question on ABC News asking if he considered President Putin a murderer.

As tensions between Russia and the U.S. surfaced, the analysis that Russia might increase oil production as a retaliatory measure had a strong impact on oil prices. Philip Streible, Chief Market Strategist at Blue Line Futures, explained, "Tensions are escalating as the U.S. tightens sanctions on Russia," adding, "Russia's possible retaliation is to increase supply in the oil market to attack U.S. shale oil producers."

Delays in vaccine supply in Europe also led to concerns over reduced oil demand. European countries collectively halted AstraZeneca vaccinations due to reports of blood clot side effects, causing disruptions in inoculation efforts. The day before, the European Union (EU) announced that it might ban the export of vaccines produced in the EU due to shortages of AstraZeneca vaccines coming from the United Kingdom, raising concerns about vaccine supply disruptions within Europe. Amid worries that Europe's COVID-19 recovery will proceed slowly, demand shifted to safe-haven assets such as U.S. Treasury bonds, the dollar, and gold, further driving oil prices down.

Concerns over inventory also compounded the situation. The U.S. Energy Information Administration (EIA) reported the previous day that U.S. crude oil inventories for the past week reached 2.4 million barrels, exceeding prior forecasts by more than 1 million barrels.

Experts analyzed that beyond short-term issues, the outlook for medium- to long-term oil demand decline has led international oil prices to peak and enter a downward trend. According to CNBC, Naim Islam, Chief Market Strategist at the international brokerage firm Abatrade, said, "Since the International Energy Agency (IEA) report pointed out that oil demand has peaked, selling pressure in the oil market has increased," adding, "It will be difficult for international oil prices to rebound for some time." The IEA, in its 'Oil Market Report,' analyzed that global oil consumption will continue to decline amid electric vehicle development and green policy trends, making it difficult to recover to pre-COVID-19 levels seen in 2019.

This content was produced with the assistance of AI translation services.