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Oil prices slipped below $100 per barrel on Friday from $105 a day earlier as energy supplies from Russia escaped any direct US sanctions that came in the wake of the Russian invasion of Ukraine.
Crude traded between $98 and $102 per barrel in international markets during the day.
Russia had launched an invasion of Ukraine on Thursday, triggering concerns that the war and the consequent economic sanctions by the Western powers could disrupt energy supplies from Russia. This sent oil and gas prices rocketing.
But the US sanctions that targeted Russia’s financial institutions and arms industry left energy exports untouched, primarily because of Europe’s heavy dependence on Russian oil and gas.
The Asian liquefied natural gas (LNG) price benchmarks have also risen on fears of supply disruptions. Higher prices in the spot market have already cut India’s LNG imports for months.
US president Joe Biden said the United States was working with other countries for a coordinated release of additional oil from their strategic petroleum reserves. These releases can have a limited and temporary effect on prices.
The oil market has been facing a supply crunch for months amid a demand resurgence, pushing up prices. Prices have risen almost 50% in three months. The recent increases have been driven by the Russia-Ukraine conflict.
The Organisation of Petroleum Exporting Countries (OPEC) and allies led by Russia have kept artificial curbs on supplies. The group has been promising to add small amounts of supplies every month but many of its members are unable to meet their production targets. Shale producers in the US or the majors like BP and Shell have been focused on increasing shareholder return rather than increasing capex to produce more oil.