Leading banking and financial experts have noted that the current oil market differs significantly from that before Russia’s invasion of Ukraine on February 24, 2022.
“It is the most significant set of market dislocations and distortions in energy markets generally speaking that I ever recall,” Ed Morse, global head of commodity research at Citi explained.
Morse observed the emergence of two sub-oil markets following the conflict’s outbreak, namely “a transparent oil market, and a non-transparent market.” On one hand, Russian oil exports to Europe have been largely redirected to Asia following Western-imposed sanctions, while Europe has largely sourced new energy suppliers, thereby almost eliminating its dependency on Russian oil.
Earlier this month, an E.U. ban on Russian oil product exports was imposed. This follows a G7 price cap on Russian oil in an attempt to weaken the country’s coffers.
Although the market continues to face much volatility, prices have been largely restabilized since the start of the Russia-Ukraine conflict. Following the invasion, West Texas Intermediate skyrocketed to a peak of $123.70 per barrel and Brent futures hit $127.98. As of Friday, West Texas Intermediate is hovering around $75 per barrel while Brent is approximately $82 per barrel.