Oil Prices Plunge, What's Happening with Greenland and Iran?
World oil prices plunged by about 2% to their lowest level in a week on Thursday. Brent fell to USD 64.06 per barrel, while West Texas Intermediate (WTI) fell to USD 59.36 per barrel. This decline occurred after US President Donald Trump downplayed threats against Greenland and Iran, as well as some positive developments regarding the Russia-Ukraine war.
Trump said he had secured full US access to Greenland through an agreement with NATO. The NATO chief emphasized that member states must improve Arctic security to counter potential threats from Russia and China. This statement eased market concerns about geopolitical risks in the region.
In addition to Greenland, Trump also emphasized that there would be no US military action against Iran, although he warned that action would be taken if Iran continued its nuclear program. The easing of tensions in both regions has reduced the risk premium on oil supply, according to Ole Hansen, an analyst at Saxo Bank.
The situation in Ukraine remains a concern. Ukrainian President Volodymyr Zelenskiy said some security guarantees had been agreed upon after meeting Trump, but key territorial issues in the war with Russia remain unresolved. A potential peace deal could boost global oil supplies if sanctions against Russia are lifted.
Russian oil production fell 0.8% to 10.28 million barrels per day last year. Meanwhile, Venezuela has resumed oil exports through a US-backed agreement, while reforms to the country's hydrocarbon law allow foreign companies to operate oil fields in the country. This new influx of oil could further pressure prices.
Beyond geopolitics, US oil inventories increased more than expected. The US Energy Information Administration (EIA) reported a build of 3.6 million barrels for the week ending January 16, far exceeding analysts' expectations of 1.1 million barrels. This surge in inventories has added pressure on oil prices.
However, Amin Nasser, CEO of Saudi Arabia's Aramco, said that concerns about a global oil oversupply are overblown, as demand remains strong and global inventories are dwindling. Given these geopolitical and supply factors, oil prices are expected to remain around USD 60 per barrel in the near term. (az)
Source: Newsmaker.id
