This week is an important time window. Since last Friday, the market’s concerns about the escalation of the conflict between Russia and Ukraine have erupted again. Judging from the arguments of the United States, Russia, and Ukraine, there are ideological contradictions. On the one hand, the United States is carrying out an offensive against Ukraine. Large-scale weapons delivery, on the one hand, it is claimed that Russia is most likely to launch an air strike on Ukraine this week. On the Russian side, Putin said that “Russia does not understand why the United States deliberately disclosed to the media false information that Russia planned to “invade” Ukraine.” Ukraine intends to seek support from the United States, and the Ukrainian president invited Biden to visit Kiev.
“What is behind this series of actions is that market panic is rising rapidly, and the capital market is mainly risk aversion. The energy side is more concerned about the follow-up rhythm of this incident, and whether the United States will issue corresponding measures against Russia. Sanctions will intensify the already tight crude oil supply situation, causing oil prices to rise further. At present, geopolitical factors are the most important leading factor in oil price trends, so prices will show a pattern that is easy to rise but difficult to fall.” Everbright said Zhong Meiyan, Director of Futures Energy.
Some market participants believe that if Russia invades Ukraine, energy prices are expected to surge, possibly pushing crude oil prices above the $100 per barrel threshold for the first time since 2014.
What is the current supply and demand situation in the international oil market? How will high oil prices stimulate the supply side in the future and what impact will the Iran nuclear deal have on supply and demand?
Zhong Meiyan told reporters that the current overall supply and demand in the oil market is still tight, mainly due to the slow pace of OPEC+ production capacity realization and the increase in uncertainty in supply due to geopolitical and other factors. The impact on the future supply side will mainly focus on U.S. shale oil data. As of the week of February 11, the number of U.S. oil and natural gas drilling rigs increased by 22 to 635, an increase of 238 rigs from the same period last year, an increase of 60%. It was the largest increase since February 2018.
Among them, the number of oil rigs in the United States increased by 19 to 516, and the number of natural gas rigs increased by 2 to 118, the highest level since January 2020. Against the background of a sharp increase in the number of U.S. rigs in a single week, U.S. shale oil production is expected to gradually increase in the future, with U.S. crude oil production returning to 11.7 million barrels per day on a weekly basis. If the number of rigs is ahead of production for about one and a half months, the subsequent increase in U.S. crude oil production will be at the beginning of the second quarter.
Tensions in Ukraine would raise risk premiums and prompt oil prices to rise, but only briefly before crude supplies are actually affected. As long as supply is not affected, prices like these won’t last. “With the favorable geopolitical situation, oil prices have been consolidating at a high level. However, the United States and the United Kingdom have stated that Russia may take offensive military actions this week. Under the tight supply situation, it is recommended to continue to focus on the long-term strategy of bargain hunting and pay attention to the risk of increased volatility.” CITIC said Chen Xinnian, crude oil futures analyst at Jiantou Futures.
After the tension between Russia and Ukraine intensified last weekend, injecting a risk premium into oil prices, the Asian market opened higher on Monday and continued to move higher after compensating for gains. After the Asian market closed, oil prices gave up their previous gains. On the one hand, they were affected by some profit-taking. On the other hand, the Ukrainian ambassador to the UK mentioned on Monday that Ukraine is willing to make many concessions in order to avoid war, but has no plans to do so. Abandoned plans to join NATO. Overall, oil prices have consolidated at a high level as the geopolitical situation has improved. However, the United States and the United Kingdom have stated that Russia may take offensive military actions this week. Under the tight supply situation, it is recommended to continue to focus on the long-term strategy of bargain hunting, because the fundamentals and The risks of the geopolitical situation all indicate that the upward risk of oil prices is greater.
</p
