Russia’s Decision Influenced Oil Prices

Oil fell more than 3% from a seven-year high on Tuesday. Oil prices declined after the Russian Federation said some of its military units were returning to their bases after exercises with Ukraine, a move that appeared to de-escalate tension between Russia and the West.

Nevertheless, it was not clear how many units were being withdrawn, and by what distance.

Brent crude dropped $2.87 or 3% to $93.61 by 12:22 GMT. U.S. West Texas Intermediate (WTI) crude fell $3.49 or 3.7% to $91.97.

Both of them reached their highest since September 2014 on Monday. Brent crude jumped to $96.78 and WTI crude rose $95.82. The price of Brent jumped 50% last year as a global recovery in demand from the Covid-19 pandemic strained supply. 

Oil prices and challenges

The latest Russia-Ukraine development drew a cautious response from Ukraine as well as Britain, after days of U.S. and British warnings that Russia might invade Ukraine at any time. 

On Monday, U.S. President Joe Biden and British Prime Minister Boris Johnson discussed the situation. They agreed in a call on Monday there was a crucial window for diplomacy. 

Apart from Ukraine, investors are also monitoring talks between the United States and Iran on reviving Tehran’s nuclear deal. This week, Russian Foreign Minister Sergei Lavrov spoke to his Iranian counterpart Hossein Amirabdollahian. Talks on the revival of the Joint Comprehensive Plan of Action (JCPOA) resumed in Vienna on Tuesday. 

Lavrov and Amirabdollahian noted a “tangible move forward” in reviving Iran’s nuclear deal according to Russia’s foreign ministry. 

They also exchanged views on the recent visit of Iranian President Ebrahim Raisi to Moscow. Amirabdollahian and Lavrov reassured their readiness to foster cooperation in a wide range of fields.