Global crude markets have swung from chaos to calm in just a few weeks as frenzied trading and a run-up in prices triggered by Russia’s invasion of Ukraine gives way to a return to more normal conditions.
The shift can be seen in everything from a roller-coaster ride in futures to big fluctuations in spot differentials, which ballooned when the crisis erupted, then narrowed. The premiums for varieties from the Middle East to West Africa have come back down as some Russian flows continue, a virus outbreak hurts Chinese demand, and the U.S. and allies tapped stockpiles, traders said.
The world’s most important commodity hit almost $140 a barrel in early March as the war stoked concern the OPEC+ producer would be unable to deliver any cargoes. That didn’t happen as a dependent Europe continued to take barrels of Russia’s Urals crude, and more flows got snapped up in Asia. At the same time, the U.S. and its allies agreed to deliver an unprecedented release of strategic reserves, dragging prices back toward $100.
“Physical prices have suffered,” said Giovanni Staunovo, a commodity analyst at UBS Group AG’s global wealth-management unit, citing Russian exports not falling as some expected and releases of reserves. In addition, there’s been weaker demand in China and Russia on mobility curbs and sanctions, he said.
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