BENGALURU: Oil slid over 12 per cent on Wednesday after reports that the United Arab Emirates will call on fellow Opec members to boost production, potentially easing some of the supply concerns caused by sanctions on Russia after its invasion of Ukraine.

Oil was already pulling back earlier in the session from a rally to peaks not seen in more than a decade, as some investors’ fears over a disruption in Russian supplies eased and the International Energy Agency said oil reserves could be tapped further.

Prices hit session lows after the Financial Times reported Yousef al-Otaiba, the UAE’s ambassador to Washington, said the country favours increasing production.

“That’s not nothing. They can probably bring about 800,000 barrels to the market very quickly, even immediately, bringing us one-seventh of the way there in replacing Russian supply,” said Bob Yawger, director of energy futures at Mizuho.

Brent was down by 12.4pc to $112.15 per barrel at 1849 GMT, while the main US contract, WTI, tumbled 11.4pc to $109.59 per barrel.

The market had rallied over 30pc, with global benchmark Brent hitting a 2008 high at $139 a barrel, since Russia, the world’s second-largest crude exporter, invaded Ukraine on Feb, 24, and the world retaliated with financial sanctions, and this week, bans on oil imports.

Brent had gained 28pc in the previous six days of trading, and the Relative Strength Index, a momentum indicator, suggested the market was due for a selloff.

“There was definitely room for a little bit of a cooldown here,” Yawger said. “At these levels, you were going to run out of buyers.”

US President Joe Biden on Tuesday imposed an immediate ban on Russian oil, but major European nations did not join in, largely because those nations are more dependent on Russian oil.

Britain said on Tuesday it would phase Russian imports out, however, and numerous buyers have stopped buying Russian crude. JP Morgan estimated around 70pc of Russian seaborne oil was struggling to find buyers.

Published in Dawn, March 10th, 2022