Oil Futures Settle Sharply Lower

Oil prices plunged sharply on Wednesday, a day after recording their highest close in fourteen years.

Oil prices rallied in recent sessions amid concerns over supply disruptions due to Russia’s invasion of Ukraine and the subsequent sanctions on Russia by the U.S. and its Western allies.

The U.S. announced a ban on imports of Russian energy products, and the U.K. announced its own restrictions on buying Russian oil imports, saying it will phase out the country’s imports by the end of 2022.

Analysts said the U.S. and U.K. ban on Russian oil imports will be far less disruptive to global markets than a full international embargo.

Analysts said the ban may have a muted effect without other countries joining in step. Despite rising concerns over supply shortages, there are signs the market is not short of oil yet.

West Texas Intermediate Crude oil futures for April ended down by $15 or about 12.1% at $108.70 a barrel, suffering the worst setback since late November 2021.

Brent crude futures plunged $16.8 or about 13% to $111.1 a barrel, posting its biggest single-session drop in almost two years.

Oil’s retreat was also due to reports about the U.S. encouraging more oil production from other sources. A Reuters report quotes Iraq as saying that it could increase output if OPEC+ asks. The UAE is also reportedly ready to support increased production by OPEC and allies.

Data from U.S. Energy Information Administration showed crude inventories in the U.S. dropped by 1.9 million barrels in the week ended March 4.

The data said gasoline stockpiles fell 1.4 million barrels last week, while distillate stockpiles dropped by 5.2 million barrels.

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