Oil prices have fallen to levels that don’t reflect the risk of disruptions to Russian exports or the ability of China to keep the coronavirus pandemic under control, according to the world’s biggest independent crude trader.
While Brent surged to almost $140 a barrel soon after Russia’s attack on Ukraine in late February, it sunk 13% last week to around $104. That was due to the U.S. announcing an unprecedented release of strategic reserves to tame fuel prices and virus cases rising in China.
Those developments overshadowed the potential for a drop in oil from Russia over the coming months. Traders, shippers, insurers and bankers are wary of taking on Russian barrels as Western governments isolate and sanction Moscow for its invasion.
“Oil feels cheaper than most would’ve predicted,” Mike Muller, Vitol Group’s head of Asia, said Sunday on a podcast produced by Dubai-based consultant and publisher Gulf Intelligence. “Oil prices could be higher given the risk of disruption of supplies from Russia. But people are still lost figuring out those numbers.”
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