All eyes on Russia and Ukraine

Oil prices remain stuck at their highs, around $96/b for Brent 1st-nearby. The market is fully focused on what is happening on the Russian-Ukrainian border. The Ukrainian President appeared to raise the possibility of Ukraine withdrawing its application to join Nato, while making a dubious joke about the timing of a possible Russian attack. At the same time, Russia said it was ready to continue talks, but the Biden administration noted that Russian troops were still amassing at the border. The German Chancellor is due to meet the Russian President today. Uncertainty is at its peak and markets are preparing for the worst. The spread between the first two Brent contracts has risen above $2/b.

The news flow on the Iranian nuclear negotiations continues to be positive but this is not important for the market in the current context. Similarly, in the US, Permian Basin production hit its third consecutive record high of 5.06mb/d in January, another signal of a shale oil revival after last week’s surge in active drilling.