As the conflict between Ukraine and Russia intensifies,
the crude oil prices stumbled in the crude oil markets, falling from the record
prices on Friday, last week.
The prices started falling despite the involvement of
a key player in the global energy markets in the growing conflict.
The NATO, meanwhile, has started deploying its
fighter jets in the Eastern European countries, which are members of the
organization, as deterrence, rather than a show of force.
Russia, in turn, is planning its naval exercises in
the international waters off Ireland, something that the latter is not very
fond of observing. The US, meanwhile, is planning to deploy thousands of troops
in the region, while providing Ukraine with military assistance.
Although the sabre-rattling is on the rise, a direct
military confrontation is unlikely between the warring factions at present, as
both sides are fully aware of the cost on many fronts – when the world can
least afford it.
As far as the crude oil markets are concerned, a
potential conflict even at psychological level could push the price of oil on
an upward spiral. In addition, it is not going to be an incentive for the
investors to get involved in the sector, when producers cry out for lack of
investment.
The rising crude oil prices, meanwhile, have slowed
down the fall of US crude inventories, as shown by the EIA, US Energy
Information Administration, in its latest weekly report. It, once again, shows
the negative correlation between the crude oil prices and US oil inventories:
the greater the price, the higher the inventory builds.
In the Middle East, meanwhile, the drone-and-missile
attacks by the Houthi rebels are causing real concern in the region; Arab
coalition aircrafts are hitting back and judging by what we hear in the media,
the collateral damage is on the rise.
All in all, at present, crude oil markets are
jittery and investors are closely monitoring the lingering worrying factors
while exercising extreme caution.
