Conflicts in the Eastern Europe and Middle East push the crude oil prices down

Falling oil prices


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.

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