Brent crude price hits $100 a barrel

• Oil prices have risen sharply due to growing tensions between Russia and Ukraine, which could also disrupt oil production from the one of the world’s largest oil producers – Russia.
• Global oil consumption has exceeded oil supply since mid-2020, leading to six consecutive quarters of low global oil inventories.
• The US Energy Information Administration forecasts oil inventories to improve in March and reduce Brent crude oil prices to average $87 per barrel in the second quarter of 2022.

Fuel prices are not going down anytime soon as Brent crude oil prices hit $100 per barrel for the first time since 2014. Oil prices have risen sharply due to growing tensions between Russia and Ukraine on chances of disruption in oil production.

Note that Russia is one of the world’s top producers of crude oil and western countries have threatened to impose new financial and economic sanctions on Russia if it invades Ukraine. So, any western sanctions would disrupt the oil supply from one of the largest producers of oil.

However, reports said that oil prices were expected to cool down on hopes of diminishing tension over Russia-Ukraine especially after US President Joe Biden said there was still “room for diplomacy” to resolve the Ukraine crisis.

This also escalates concerns for the Indian economy as the country is dependent on oil imports and any rise in oil price increases the import bill. India imports over 80% of its oil needs.

Moreover, global oil consumption has exceeded global oil supply since mid-2020, leading to six consecutive quarters of global oil inventory draws.

The US Energy Information Administration forecasts oil inventories to improve in March and reduce Brent crude oil prices to average $87 per barrel in the second quarter of 2022.

Following the development, the Indian equity market on February 17 may reflect these concerns.

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