Why are prices falling amidst war and threats? Inside Story:

A lot of ups and downs are being seen in the crude oil market these days. On one hand, there is an atmosphere of war all over the world, while on the other hand, oil prices have softened. The latest news is that Brent Crude has fallen below $63 per barrel in the international market. At the same time, West Texas Intermediate (WTI) is also trading below $59 after the fall.

After all, why is it happening that despite increasing tension, oil is becoming cheaper? Let us understand in simple language.

Putin and America’s talks: Result cipher?
The market’s eyes were fixed on the ongoing ‘high-profile’ talks between Russia and America. The Kremlin (Russian government) says President Vladimir Putin has had “very productive” talks with US ambassadors (Steve Witkoff and Jared Kushner). There was hope that perhaps some way would be found to end the Ukraine war, but at present no concrete plan has been agreed upon.

This uncertainty has forced traders to think a bit about what will happen next.

Russia’s warning: ‘If the ship is attacked…’
Tension increased further when Putin gave an open warning on a TV channel. In fact, Russia’s energy assets (ships and refineries) are under continuous attack. Putin has clearly said that if the attacks on his fleet do not stop, Moscow will target the ships of countries that are supporting Ukraine. This is a big statement which can put the oil supply line in the sea at risk.

Even experts are surprised. Robert Rennie of Westpac Banking Corp. says, “It is surprising that despite so many attacks on Russian refineries, why did the prices of Brent crude not increase further?”

Then why is oil falling? (real reason)
After so much tension, there should have been a fire, but the main reason for the falling prices is- ‘Inventory’ means stock of oil.
Oil stocks in America are continuously increasing. An industry report shows that last week the crude oil reserves in America were almost 2.5 million barrels has increased. The stock of gasoline (petrol) has also increased. The rule is simple—when warehouses are full, prices go down, even if there is a war going on outside.

Trump’s stick on Venezuela
On the other hand, former US President Donald Trump has given strict statements regarding Venezuela. He said that they can launch ground attacks to eliminate drug cartels. Venezuela is also a big producer of oil, so the movement there can also affect the supply.

What next?
On Wednesday, America will release its government figures, which will make the picture clearer. At present it seems that the market is more worried about ‘excess supply’ (surplus) than the fear of war, and that is why the prices are going down.